Adani Group's airport arm today said it will be acquiring a controlling stake in GVK-run Mumbai International Airport Limited (MIAL), the successful completion of which will make Adani the second-largest airport operator in the country.

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GVK said the acquisition will help improve the financial position of the Mumbai International Airport as Adani has agreed to take on the debt of GVK Airport Developers Limited (GVK ADL).

The acquisition will take place through the group's holding company for the airports business - Adani Airport Holdings Ltd (AAHL), a subsidiary of Adani Enterprises. GVK ADL is the holding company through which GVK Group holds 50.50 percent equity in Mumbai International Airport Limited (MIAL), which in turn also holds 74 percent equity stake in Navi Mumbai International Airport Limited, Adani said in a press release.

Adani Group will also take steps to complete the acquisition of a 23.5 percent equity stake from ACSA and Bidvest in MIAL for which it has obtained CCI approval, it said. "Upon the acquisition of the debt of GVK ADL, Adani Group will take steps to obtain necessary customary and regulatory approvals, as may be required", the Adani Group said in a statement.

In total, Adani will end up acquiring 74 percent stake in MIAL.

The terms of the agreement include the acquisition of debt by Adani from various GVK lenders including a Goldman Sachs-led consortium and HDFC, releasing GVK of various obligations, securities and corporate guarantees given in respect of debt to be acquired by Adani, and the ability for Adani to convert the acquired debt to equity of GVKADL on mutually agreed terms, subject to obtaining necessary regulatory approvals.

GVK in a statement added that Adani will infuse funds into Mumbai International Airport Limited to provide liquidity and will work towards achieving financial closure of the Navi Mumbai International Airport project by Adani at the earliest in order to begin construction.

"The aviation industry has been severely impacted by COVID-19, setting it back by many years and has impacted the financials of Mumbai International Airport Limited. It was therefore important, that we bring in a financially strong investor in the shortest possible time to improve the financial position of MIAL, as well as to help achieve Financial Closure of the Navi Mumbai International Airport project, which is a project of national importance. It is under these circumstances that we agreed to cooperate with Adani so as to achieve these twin objectives.," GVK Reddy, Founder, and Chairman, GVK said in a statement.

"Further, when the transaction is consummated, which is subject to customary approvals, we would be reducing a significant portion of liabilities to our lenders, which is of utmost importance to the group,” Reddy said.

Separately, GVK has notified the Abu Dhabi Investment Authority, National Investment and Infrastructure Fund and PSP, collectively that the Transaction Documents stand terminated, as it is no longer effective and implementable.

"The reason for this decision was a) the terms of the transaction envisaged in the Transaction Documents were not implementable and b) the alternative proposals discussed would not provide a resolution to the lenders of ADL by the end of August, which was a requirement of our lenders," the GVK statement said.

First Published:Aug 31, 2020 11:07 AM IST