Infrastructure major GMR Group plans to reduce its corporate debt by 20% to 30% in 18 months, after cutting its loan by a third through the $300 million (about Rs 2,000 crore) raised from the Kuwait Investment Agency (KIA).
GMR had raised the money via a foreign currency convertible bond (FCCB) issue.
The company will, however, not rush into equity stake sales at the Delhi International Airport as that would dilute the value of the asset, chief financial officer Madhu Terdal said. It will instead pursue alternate arrangements with existing private equity investors such as Macquarie SBI, JM Financial and Old Lane, among others, he added.
“Right now the priority is to retire high-cost Indian debt with low-cost foreign funds and that is what we are doing with this FCCB issue from KIA,” Terdal told HT, adding that they may look at raising $1 billion for the airport business at a later stage.
GMR had been a much-coveted company among equity investors and banks and financial institutions till 2008, when the Lehman liquidity crash hit the company’s ability to service its debts, which currently totals Rs 41,000 crore.
The company currently has Rs 7,000 crore of corporate debt — not backed by any projects — which is extremely risky. The company is looking to reduce it by about 60% by March 2016.
“We had to borrow funds to complete our projects and that inflated our loans,” Terdal said.
Till March 2014, the ratio between under-construction debt and operational debt was Rs 19,000 crore and Rs 18,000 crore. By March 2015, the operational debt rose to Rs 27,800 crore, while under-construction debt was Rs 12,000 crore. By March 16, the break-up is expected to change to Rs 39,000 crore and Rs 2,000 crore.