Temasek, IDFC to buy CCPS in GMR Infra worth Rs 1,136 cr

This will help firm to avoid buying back CCPS given to PE investors, which would have put further stress on its debt position

A group of investors led by Singapore-based Temasek and IDFC Consortium have agreed to pick up Compulsorily Convertible Preference Shares (CCPS) worth Rs 1,136.6 crore in Bangalore-based GMR Infrastructure Limited (GIL). GMR will issue CCPS worth Rs 788.8 crore to Temasek and Rs 347.8 crore worth shares to IDFC consortium through a preferential allotment. This allotment is lieu of the investments made earlier in GMR Infrastructure's subsidiary GMR Energy.

Earlier, these investors had invested Rs 1,395 crore through CCPS in GMR Energy Limited (GEL) in 2010. Both the private equity investors have now agreed to pick up shares in GIL as per the restructuring agreement reached with the GMR Infrastructure, the company said in a statement. However, the residual investment of the investors worth Rs 258.4 crore in GEL will continue.

The move follows a protracted negotiation for the past few months between the investors and GMR management. This will help the company avoid buying back the compulsory convertible preference shares given to the PE investors as it would have put further stress on its debt position.

Earlier, in September last year, the PE investors had dropped the option of exercising the put option and started negotiations with the company. The management of the debt-stressed company agreed to offer preference shares to the investors in GMR Infrastructure, as it would be a big relief for the company. It was not in a position to buy back the shares as it was grappling with a debt burden of Rs 41,000 crore with a gearing at 3.7 times.

If the PE investors had exercised the put option, GMR would have had to buy back from them, further straining their balance sheet, at a time when the company is looking to infuse as much as Rs 1,700 crore through the equity route to fuel its power projects during FY14.

The power vertical, which contributes around 25% of total group revenues of close to Rs 10,000 crore, has been facing intense problems over the past many quarters at a couple of its operational plants as gas was not available to fuel them.

For the third quarter ended December 31, 2013, GMR Infra's net loss after minority interest more than doubled to Rs 441 crore on a net revenue of Rs 2,123 crore compared to the corresponding quarter last year. Energy segment of the group suffered Rs 333 crore loss during the third quarter despite increased revenues as against Rs 158 crore loss in the same quarter last year. The segment garnered Rs 762 crore revenues during the October- December quarter against Rs 529 crore in the corresponding quarter of previous year.

The company's stock closed 2.27 per cent higher at Rs 20.30 per share on Bombay Stock Exchange on Friday.