GMR Airports (GAL), managing aviation hubs in Delhi, Hyderabad, and North Goa, has secured INR 2,250 crore from finance firms and private credit investors at a 13 percent interest rate. Notable investors include JP Morgan, Tata Capital, Navi Finserv, HSBC, Aditya Birla Capital and Varde Partners GAL aims to address its high-cost debt and finance equity investments. The borrowed amount is part of a larger INR 5,000 crore borrowing plan. GAL plans to use the funds to refinance debt and invest in subsidiaries. Despite high debt, GAL's interest expenses are expected to decrease gradually, reflecting a positive outlook for its airport assets, including those under development.
"GMR Airports (GAL), which manages aviation facilities in Delhi, Hyderabad, and North Goa, secured INR 2,250 crore from finance companies and private credit investors. The funds were raised at an interest rate of 13.275% through listed, unsecured, rated, non-convertible bonds with a tenure of two years and ten months. GMR Airports will provide a 5% cash coupon and an 8.275% redemption premium.
JP Morgan Securities Asia Pacific invested INR 830 crore, Tata Capital INR 800 crore, Sachin Bansal-promoted Navi Finserv INR 300 crore, and HSBC invested INR 200 crore from its branch in Gujarat International Finance Tec-City (GIFT City). Aditya Birla Capital invested INR 100 crore, and Varde Partners, through its entity named Credit Solutions India Trust, invested INR 20 crore.
The company holds a net debt of approximately INR 25,000 crore, a significant portion of which constitutes high-cost debt. In the October-December quarter, its finance expenses surged by around 45% to INR 857 crore, leading to a net loss.
GAL faces high interest expenses primarily due to the absence of current cash flows. However, cash flows are anticipated to materialize over the next 3 to 5 years. The debt incurred by GAL is primarily intended for equity investment. This marks the final portion of the INR 5,000 crore borrowing sanctioned by its board last October.
GMR Airports faces repayments of INR 1,974 crore scheduled between June and September 2024, as outlined in the bond document. The funds from the bonds will be allocated towards refinancing this debt and investing in its subsidiaries. At each funding round, the interest rate has decreased as stated by Chawla.
The GMR Group possesses eight airport assets either operational or in various stages of development, with another secured through bidding. We have been consistently monitoring interest rates. In Goa, recently completed, rates stand below 10% for five-year fixed NCDs. Hyderabad witnessed a raise at 8.75%, while Delhi stands at 9.75%. These rates are highly competitive. Even for GMR Airports, we have significantly lowered our interest expenses as explained by CFO GRK Babu to analysts.
GMR’s operational airports include Delhi, Hyderabad, North Goa, and Cebu in the Philippines. Bhogapuram (Andhra Pradesh), Bidar (Karnataka), Crete (Greece), and Medan (Indonesia) are under development. The group has secured the Nagpur airport bid but awaits project awarding."
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