BackGMR Infrastructure to raise Rs1,400 crore via rights issue
The issue will consist of 93.45 crore fully paid up equity shares with face value of Rs1 each
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Mumbai: Bengaluru-based infrastructure conglomerate GMR Infrastructure Ltd on Monday said it plans to raise ₹ 1,401.83 crore by selling shares to existing shareholders, in a bid to repay debt.
The issue will consist of 93.45 crore fully paid-up equity shares with face value of ₹ 1 each, the company said in a filing to BSE. Eligible shareholders will be offered three shares for every 14 shares they hold.
The issue price is fixed at ₹ 15 per equity share.
The issue price is offered at a discount of 20% to the closing market price on Saturday. Shares of GMR Infrastructure lost 3.47% to ₹ 18.10 on Monday at 10.40am on the BSE, while the benchmark Sensex gained 0.46% to 29,495.58 points.
This issuance will not only increase the net worth by an equivalent amount, but will also improve the debt equity ratio of the company, GMR said in a statement.
The funds raised would be utilized for repayment of debt by GMR Infrastructure and its subsidiary GMR Energy Ltd, as part of the group’s deleveraging strategy.
The total debt repayment would be to the extent of ₹ 1,200 crore, which is around 90% of the issue size, resulting in reduction of significant interest burden for the company, it said in a separate statement to investors.
“This rights issue also reinforces the commitment of the promoters and their faith in future growth prospects of the company. The promoters have fully tied the funds required for this purpose and they will not only be subscribing to their portion of 65% shareholding in the company but also more, if required," the company’s statement said.
GMR Infrastructure had debts of ₹ 40,110.83 crore as on 30 September 2014.
The lead bankers for the rights issue are JM Financial Ltd, Axis Capital Holdings Ltd, ICICI Securities Ltd and SBI Capital Markets Ltd.
“GMR was readying for this rights issue for last six months in order to reduce the debt burden. GMR has opted to launch the rights issue after the union budget. GMR has already tied up funds for the rights issue," said a senior analyst at a domestic broking firm tracking GMR Infrastructure stock. He requested anonymity as he is not authorized to speak to media.
Prior to the rights issue, private equity firm KKR and Co. will invest ₹ 1,000 crore in GMR Holdings Ltd through a long-term structured financing arrangement.
GMR Holdings, in turn, will subscribe to ₹ 1,000 crore worth of rights issue of GMR Group’s flagship company GMR Infrastructure.
GMR Infrastructure, in September 2014, had said GMR Holdings entered into a financing agreement with KKR for long-term structured investment.
Last year, it had plans to raise ₹ 1,500 crore. GMR Infrastructure’s chief financial officer Madhu Terdal had said that ₹ 1,250 crore out of ₹ 1,500 crore would be used to retire high-cost debt, resulting in interest cost savings of at least ₹ 150 crore a year.
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