GVK Airport Holdings Ltd, the majority owner of Mumbai International Airport Ltd (MIAL), has approached lenders to urgently raise cash to ward off a potential takeover of the prized asset, two people directly aware of the development said requesting anonymity.
The owners, who pledged a majority of their stake in the asset to three private banks, are due to repay the debt in the coming months, failing which the lenders are likely to invoke the pledge and can sell the stake to a third party to recover the dues. The immediate value of the total promoter pledge could not be ascertained.
This comes against the backdrop of recent reports that the Adani group, which had recently won bids to operate six airports across India, is in talks with GVK to acquire a controlling stake in MIAL.
“The promoters categorically deny these reports,” said a senior GVK official. “In all likelihood, Adani group is talking to the lenders to acquire the pledged shares and thereby wrest control.”
The Adani group had earlier tried to acquire a minority stake in MIAL by buying out South Africa’s Bidvest, which owns a minority stake in the asset.
However, GVK had stalled the transaction by invoking its right of first refusal, which again was challenged by Bidvest after the promoters failed to make the payment on time. The matter is sub-judice.
“GVK Airport Holdings pledged 63% of its ownership in MIAL with three lenders for ₹2,150 crore,” the second person said.
“If they fail to make the repayment on time, it will be up to the lenders to decide if they want to invoke the pledges. A transfer of controlling stake in MIAL is subject to the approval of the government and joint venture partner Airports Authority of India (AAI), which owns a 26% stake in it.
In July, the Central Bureau of Investigation had charged the GVK group promoters with siphoning off funds totalling ₹705 crore and accused them of causing a loss of ₹310 crore to the exchequer by entering into fake work contracts on the land given by the government.
An agreement signed in October 2019 where Abu Dhabi Investment Authority, Canada’s Public Sector Pension Investment Board, and state-backed National Investment and Infrastructure Fund sought to buy a 79.1% stake in GVK Airport Holdings, is yet to come through.
On Tuesday, The Economic Times reported that the two global investors have written to the central government seeking a transparent solution to the “takeover drama surrounding MIAL”.
Mint did not receive responses to queries emailed to Adia until press time, while PSP Investments chose not to comment. It was not immediately clear if the transaction was still in force.
MIAL is a joint venture of the GVK group (50.5% held through GVK Airport Holdings Ltd), AAI (26%), Bid Services Division (Mauritius) Ltd (13.5%), and ACSA Global Ltd (10%).
“Whether the banks invoke the pledge and start a sale process or whether GVK tries to raise money on its own, this is now akin to a distress sale,” the second person said. “Even without the circumstances surrounding GVK, the aviation sector is expected to take the longest to recover post covid,” a third person aware of the developments within the group said.
