Bangalore: Public works financier Infrastructure Development Finance Co. Ltd, or IDFC, has agreed to lend Rs1,000 crore to Gujarat Pipavav Port Ltd (GPPL), the developer and operator of Pipavav port on the western coast, GPPL said.
Big player: An AP Moller-Maersk ship. APM Terminals, that holds the rights to operate Pipavav for 30 years, is a Moller-Maersk unit. HR Gluck / Bloomberg
IDFC has also agreed to help GPPL raise a Rs200 crore syndicated loan, the port company said. GPPL will use the money to refinance an existing rupee loan and fund expansion that is under way, according to draft documents GPPL filed with the market regulator, the Securities and Exchange Board of India, or Sebi, for a proposed initial public offering (IPO) of shares.
The port operator announced having secured the loan amid a credit crunch that has roiled global financial markets. In India, many companies have deferred fund raising plans.
A senior IDFC official, who did not want to be named because he is not authorized to speak with the media, said he had nothing to add to what had been stated in the draft prospectus.
GPPL is 54.8% owned by APM Terminals Management BV, the world’s third biggest container port operator and a unit of Danish shipping and oil conglomerate AP Moller-Maersk Group A/S. APM Terminals holds the rights to develop and operate the port for 30 years beginning September 1998. It acquired control of Pipavav port from the original promoter, SKIL Infrastructure Ltd, in April 2005.
Gujarat Pipavav Port said it expects to raise at least Rs243 crore through the share sale, but will need more money to fund its expansion.
The port operator ruled out selling additional equity because the contract signed with the Gujarat government requires APM Terminals to hold a minimum 46% stake in it till 31 December 2009.
“Hence, the net proceeds of the proposed IPO will not be sufficient for our proposed capital expenditure plans,” the firm said in its draft prospectus.
GPPL said it is also considering a pre-IPO placement of equity shares with certain investors, but didn’t give details.
The rate of interest on the IDFC loan is equivalent to 2.5% per annum above the IDFC benchmark rate prevailing on the date of each disbursement, payable monthly.
The loan has to be repaid in 48 equal quarterly instalments, starting from the end of three years from the date of the first disbursement.
An email questionnaire sent to GPPL on 3 October remained unanswered till Monday evening.
Till 16 September, Gujarat GPPL had outstanding long-term debt (including interest) of about Rs730 crore taken from IDFC, IDBI Bank Ltd, Punjab National Bank, Export-Import Bank of India, Industrial Investment Bank of India Ltd, Housing Development Finance Corp. Ltd, HDFC Bank Ltd and Union Bank of India.
On its expansion projects, GPPL had spent Rs790.47 crore till the end of August out of a total estimated cost of Rs1,421.20 crore.
GPPL is creating facilities and purchasing equipment to handle about 1.3 million standard cargo containers a year and about 3 million tonnes (mt) of bulk cargo. Currently, the port handles about 500,000 containers a year.
GPPL has also hired Zinkcon Marine (Singapore) Pte Ltd, a subsidiary of Dutch dredger Royal Boskalis Westminster BV, to deepen the port’s channel from 12.5m to 14.5m so bigger ships can call. The work will cost Rs302 crore.
The port operator also plans to set up a dedicated coal terminal, a coal conveyor belt and a new system to handle 20mt of coal by 2016.
It has signed two non-binding memorandums of understanding (MoUs) with Videocon Industries Ltd and another unnamed thermal power producing company for using the port to import coal for their proposed thermal power plants, which have an aggregate estimated capacity of 5,200MW.
GPPL is negotiating a pact with another thermal power producing company as well for using the Pipavav port.
The firm is also negotiating with Essar LNG Ltd and Swan Mills Ltd for setting up liquefied natural gas (LNG) regassification projects at Pipavav port.
Cargo traffic at India’s ports is expected to increase from 720mt to 877mt a year by 2012, and 962mt per year by 2014, according to the shipping ministry’s National Maritime Development Programme.