GMR Hyderabad airport plans US$300 million offshore bond issue

GMR Hyderabad airport plans US$300 million offshore bond issue

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Hyderabad International Airport Ltd (HIAL), a unit of GMR Infrastructure is planning to raise US$250-300 million by selling offshore bonds as part of a plan to restructure its finances.

The company has hired Citigroup Inc. and Bank of America Merrill Lynch among others to conduct road show that is expected to begin in a fortnight.

The issue would be the third such attempt by GMR in the past 12-18 months to tap high-yield and long term foreign debt to restructure its costlier project loans. The company may be selling bonds of 5-10 year tenure and the sale proceeds would likely to be used to refinance its existing high-cost debt.

GMR Infrastructure has a total consolidated debt of INR469 billion (US$7 billion) as of 31 December 2016. GMR Hyderabad International Airport Limited (GHIAL) is a company promoted as a joint venture comprising the GMR Group (63%) in partnership with Government of India (13%), Government of Telangana (13%) and Malaysia Airports Holdings Berhad (11%).

According to sources, the conglomerate is in advanced negotiations with private equity funds such as Kohlberg Kravis Roberts & Co and Apollo Global Management, along with sovereign wealth fund Abu Dhabi Investment Authority and Canadian pension giant PSP Investments, to sell a controlling stake in its Hyderabad airport.

As we reported in early October 2016, Apollo Global Management submitted a INR 20 billion (US$300 million) bid to acquire the 30 per cent stake in the Hyderabad International Airport Limited from GMR Group.

The GMR Hyderabad Airport incorporated to build, design, finance, operate and maintain the Rajiv Gandhi International Airport in Hyderabad is a public-private partnership for the build, own, operate and transfer project. The Airport began commercial operations in March 2008 and has a capacity to handle 12 million passengers and 150,000 tonnes of cargo every year in phase 1. GMR has interest in airports, energy, transportation and urban infrastructure has been exploring various options to bring down debt.

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