Gammon Infrastructure completes first tranche of stake sale in 9 projects

NEW DELHI: Gammon Infrastructure today said it has completed the first tranche of stake sale in nine projects on approval from National Highways Authority of India (NHAI) and lenders.

The infrastructure firm had announced to sell stakes in 9 projects valued at Rs 6,750 crore to Brookfield and Core Infra India Fund, a deal that will fetch Rs 563 crore on completion as well as reduce its debt considerably.

"Based on receipts of approvals from the NHAI, consent from the project SPV lenders, approvals from Gammon Infrastructure Project Ltd (GIPL) shareholders of shareholders, and satisfaction of conditions precedent on 6 SPVs out of the 9 SPVs, the first tranche of the transaction has been successfully completed today," it said in a BSE filing.

The three remaining project SPVs covered under the transaction will be transacted on satisfaction of the relevant conditions, it said.

It said, it has received Rs 138 crore cash today after the successful completion of the transaction under the first tranche.

"Consolidated debt of the GIPL will stand reduced from Rs 4,013 crore to Rs 2,648 crore," the company said.

The transaction, one of the largest asset sales at one go in the Indian infrastructure space, was announced barely days after the government last year allowing highways developers to divest 100 per cent equity in projects two years after the completion by making additional funds available for investment in projects.

Of the nine projects in which Gammon Infrastructure Projects Ltd (GIPL), a step-down subsidiary of Gammon Infrastructure, sold its stake, six are road projects and remaining three are of power.

GIPL in August had signed a share purchase agreement divesting nine of its project companies to the consortium comprising funds managed by Brookfield Asset Management and it affiliates (Brookfield) and Core Infrastructure India Fund Pte Ltd (CIIF) under the name BIF India Holdings Pte Ltd.

"Aggregate cash inflows for GIPL on the account of divestment would be approx Rs 563 crore subject to closing adjustments and an additional cash inflow of up to Rs 100 crore may be realised by GIPL upon crystallisation of certain milestones in future," it has said.

Out of the 9 project companies, six are operational, one is under expansion and two are under development.

"The total project cost at completion of the asset basket is estimated to be approx Rs 6,750 crore (Rs 2,935 crore of 6 operational projects and Rs 3,815 crore for remaining 3 projects) of which Rs 3,097 crore has been capitalised till March 31, 2015. The outstanding debt as at March 31, 2015 for these projects is Rs 1,718 crore and the net exposure of GIPL in the asset basket is Rs 415 crore," the company has said.