The investor consortium of Abu Dhabi Investment Authority (ADIA), Canada’s Public Sector Pension (PSP) Investments and India’s National Investment & Infrastructure Fund (NIIF) has put key lenders and vice-chairman of GVK Group on notice.
The investors sent a legal notice on August 27 through their lawyer, AZB & Partners, stating that the sale of Mumbai International Airport (MIAL) to the Adani Group will be a “breach” of GVK’s contract with them.
The consortium members said the growing speculation and media reports around the Adani Group’s interest in the asset was causing them concern.
The letter was sent to GV Sanjaya Reddy with copies to various bankers, including SBI chairman Rajnish Kumar, HDFC chairman Deepak Parekh and other top bankers — the CEOs of ICICI Bank, Axis Bank, Goldman Sachs India and MD of Punjab National Bank. ET has reviewed the contents of the letter.
The trio had, in October 2019, entered into an agreement with the GVK Group to buy 79% in GVK Airport Holdings for Rs 7,614 crore. Proceeds from the deal were to be used by the GVK Group primarily to retire the debt of holding companies and fund the purchase of additional shares in MIAL.
However, the matter has since been dragged to an arbitration tribunal and is sub judice.
As per the share subscription agreement dated October 27, 2019, these investors have “exclusivity” till January 27, 2021, that prohibits the GVK Group from entering into any bilateral negotiations with competing parties such as the Adanis.
The letter said the investors have only “permitted limited exception” to their agreement by allowing the Reddys of GVK Group to “explore” an alternative transaction with the Adanis. However, the “limited waiver” does not permit “execution” or any “binding agreement” for any other deal till January end. Such an event would breach the binding transaction document, the letter said.
MAXIMISE VALUE
Mails to the GVK Group, Punjab National Bank MD SS Malikarjuna Rao, ICICI Bank CEO Sandeep Bakhshi and the NIIF did not elicit a response till press time Friday. Text messages to Deepak Parekh, Rajnish Kumar, Axis Bank CEO Amitabh Chaudhry and Goldman Sachs India CEO Sanjoy Chatterjee also did not draw any response. ADIA declined to comment. A spokesperson for PSP Investment said the company will not participate in the story.
The letter said the investors have been committed to a deal and have been engaging with the GVK Group for over two years for a transaction, incurring “significant cost and efforts”.
The investors had put $300 million in an escrow account for nine months, which showed their intent to invest in MIAL, as also the greenfield airport in Navi Mumbai. They said they remain committed even now.The investors said that since MIAL was a strategic national asset, they have also written to the highest authorities in the government.
ET had reported on August 25 that ADIA and PSP Investment had written to the finance ministry and the PMO seeking their intervention.
INDEPENDENT, TRANSPARENT PROCESS
In the letter, the consortium has sought an “independent and transparent sale” process to find the best “owner and operator for MIAL”. Such a solution will also “maximise value for all stakeholders”, including the lenders of GVK Group’s holding company and MIAL.
MIAL is estimated to have Rs 7,500 crore of debt, with SBI’s exposure alone at around Rs 4,000 crore. Axis Bank, Canara Bank, Exim Bank and PNB are some of the other lenders. Earlier this year, SBI took over as the lead financier for the Navi Mumbai airport project. However, ever since the CBI and ED initiated a probe against the promoters of the GVK Group, SBI has red-flagged the account, insisting on a change in control.
This has also led to panic among the lenders of GVK Airport Holdings, which include Yes Bank, ICICI Bank, HDFC and Goldman Sachs.
The lenders together have an exposure of about Rs 5,200 crore and are believed to have asked the Reddy family to resolve the matter quickly or face invocation of pledged shares.
Source: Economic Times