GVK Power to divest 33% stake in BIAL to Fairfax for Rs 2,149 cr
28 Mar 2016
GVK Power & Infrastructure Ltd will sell 33 per cent stake in Bangalore International Airport ltd (BIAL) to NRI billionaire Prem Watsa's Fairfax India Holdings and Fairfax Financial Holdings for Rs2,149 crore.
The board of directors of the company at its meeting earlier today approved the sale of 33 per cent stake in BIAL to FIH Mauritius Investments Limited and Fiarfax India Holdings Corporation for Rs2,149 crore, the company stated.
GVK Airport Developers, a wholly-owned subsidiary of GVK Power and Infrastructure, had initiated a financing process last year to reduce its debt obligations to its lenders, the infrastructure firm said.
The transaction will help bring down the company's debt by about Rs2,000 crore, resulting in saving interest cost of approximately Rs300 crore per annum, according to the company.
The sale transaction is expected to be completed by mid-2016 subject to necessary regulatory approvals, clearance by lenders and obtaining BIAL shareholders' approval.
GVK Airport Developers, a wholly-owned subsidiary of GVK Power & Infrastructure, has initiated a financing process last year to reduce the debt obligations to its lenders.
''This is an important and successful milestone in deleveraging our balance sheet, and all proceeds from this stake sale shall be used to bring down our debt obligations to our lenders. We chose Fairfax as a partner in BIAL as we have a long-standing relationship with its Chairman, Prem Watsa,'' GVK Reddy, founder chairman and managing director of GVK, said.
''We look forward to partnering with them in developing Kempegowda International Airport through its next stage of expansion as we develop a new world-class terminal -2 and a new runway,'' he said.
''We have great admiration for GVK led by GVK Reddy and GV Sanjay Reddy in the outstanding work that they have done to develop Kempegowda International Airport to its current stature. This is a partnership between Fairfax and GVK. We will work closely with all stakeholders to manage our stake in Bangalore International Airport Ltd (BIAL) going forward, and will support Sanjay Reddy to continue to lead the management team as managing director of BIAL and GVK Reddy will continue as co-chairman of BIAL,'' said Prem Watsa, chairman of Fairfax India and chairman and chief executive officer of Fairfax.
BIAL owns and operates the Kempegowda International Airport Bengaluru under a 30+30 year concession agreement from the centre. KIAB is the first greenfield airport in India built under the PPP model.