GMR exits Turkey airport deal; still in running for Philippines

After being virtually thrown out of the Maldives airport project (See: GMR to incur heavy losses from Maldives fiasco), Indian realty and construction major GMR Infrastructure seems to be once bitten twice shy.  It has opted out of Turkey, ending its association with the Sabiha Gökçen International Airport in Istanbul by selling its 40-per cent stake for €225 million (Rs1,900 crore) to Malaysia Airport Holdings.

Malaysia Airport Holdings currently has a 20 per cent stake in the Sabiha Gökçen International Airport, while Limak Construction, a Turkish company, holds 40 per cent.

Malaysia Airports Holdings Berhad (MAHB) said in a regulatory filing that its indirectly wholly-owned subsidiary MAMSC, involved in the business of investment holding, will buy GMR's stake in the Turkish airport company.

MAHB decided to buy the stake using its 'right-of first-refusal (RoFR) after the GMR Group had reportedly entered into a definitive agreement with Turkey's TAV Airports Holdings.

''On 3 December 2013, a prospective investor of Sabiha Airport entered into a share purchase agreement with the GMR Group to acquire the acquisition shares for a total consideration of €2,25,000,000. The completion of such share purchase agreement was conditional, amongst other matters, on MAHB not exercising its RoFR in relation to the acquisition shares. On 23 December 2013, MAHB exercised its RoFR through MAMSC,'' MAHB said in its filing.

Madhu Terdal, chief financial officer for GMR Infrastructure, told CNBC-TV18 in an interview that the deal has not been concluded yet – ''It is in the RoFR process''. As and when the deal gets completed, a substantial part of the amount will be used to pare corporate debt.

The GMR Group reportedly has a debt burden of around Rs41,000 crore.

The group may also use the funds to increase its shareholding in Delhi International Airport Limited (DIAL), where it is said to be in talks to buy out Malaysia Airports' 10 per cent stake. The GMR Group may also use the proceeds to buy up the 10 per cent stake that Fraport AG holds in DIAL.

Terdal also said some of these funds would go towards the group's energy projects. At the same time, the group is not out of the running for a Philippines airport project.

''We can only tell you that whatever we have heard from the public knowledge - that we have been declared as the highest bidder. So we are expecting the award letter any time this week. Once it is there then we can formally stake a claim on that,'' he said.