Gammon Infrastructure to divest stakes in nine projects

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Gammon Infrastructure to divest stakes in nine projects

Gammon Infrastructure Projects Limited (GIPL) has signed a share purchase agreement divesting nine of its Indian project companies.

Specifically, GIPL will divest stakes in nine project companies, 6 road and 3 power, to a consortium of Brookfield and Core Infrastructure India Fund (CIIF) under the name BIF India Holdings Pte Ltd. Out of the project companies to be acquired by the consortium, 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.67.5 billion (US$1.01 billion), Rs.2,9.35 billion of 6 operational projects and Rs.38.15 billion for remaining 3 projects, of which Rs. 30,97 crore has been capitalized till March 31, 2015. The outstanding debt as at March 31, 2015 for these projects is Rs.17.18 billion and the net exposure of GIPL in the asset basket is Rs.4.15 billion.

Post the transaction, the consolidated debt of GIPL will stand reduced from Rs.39.47 billion to Rs. 22.29 billion (US$335.5 million) which is expected to improve the gearing of the company at consolidated level from more than 4x to around 2x going forward and make GIPL net cash surplus.

Mr. Abhijit Rajan, Chairman and Managing Director of the Gammon Group stated,

"The transaction involving 9 projects represent the largest asset sale at one go in the Indian infrastructure industry. This is reflective of the improved sentiments being demonstrated by foreign investors due to positive approach of the government in the infrastructure space".

Mr Anuj Ranjan, Managing Partner, Brookfield commented,

"This transaction represents Brookfield's first major investment in Indian infrastructure, and provides us a great platform to participate in the Indian growth story over the long term."

Mr Kishor Kumar Mohanty, Managing Director, GIPL added,

"This transaction allows GIPL to get the much needed capital released from its completed projects and improve its financial position to capture the new opportunities in the infrastructure space arising out of governments new initiatives. This is a win - win proposition for both Gammon Infrastructure & Brookfield and new path breaking direction for the infrastructure industry."

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