Home > companies > news > GP Group to buy majority stake in Gammon India’s EPC unit for Rs250 crore

Mumbai: Infrastructure firm Gammon India Ltd on Monday said it has accepted a proposal from Thailand-based GP Group to invest about 250 crore in its civil EPC (engineering, procurement and construction) business.

Gammon India is in the process of transferring its civil EPC business to subsidiary Gammon Retail Infrastructure Pvt. Ltd (GRIPL), as part of a restructuring it announced in November. GP Group, which is engaged in construction, logistics, aviation, energy supply, pharma, agro products, software, and mining, will buy a majority stake in GRIPL.

Gammon India has been restructuring its nearly 15,000 crore of debt through the corporate debt restructuring mechanism since September 2013. In December 2015, Mint reported that lenders to Gammon India will be converting 245 crore worth of debt to a 60.10% equity stake under strategic debt restructuring norms.

Gammon India said its board met on 2 April, when it approved the investment from GP Group. Of the 250 crore, 26 crore will be invested on consummation of business transfer agreement, which was executed on 12 February between Gammon India and GRIPL and the balance 224 crore will be invested on consummation of the scheme of arrangement for transfer of the EPC business into GRIPL for purchase of a 75% stake, Gammon India said in a BSE filing on Monday.

GP Group will reconstitute the board of GRIPL to control the board composition, Gammon India said. The 145-year-old GP Group is headed by Indian origin businessman Kirit Shah and his family.

Gammon India said its board has also approved divestment of up to 30% of its shareholding in Gammon Infrastructure Projects Ltd (GIPL), held through its wholly owned subsidiary Gammon Power Ltd (GPL). The company currently holds about 56% of the equity capital of GIPL through GPL.

“The said shares have been pledged with lenders as security for the financial facilities extended by ICICI and IDBI Bank. The company shall use the proceeds of the sale to repay ICICI and IDBI Bank," the filing said. “Expected date of completion of sale/disposal; within 6 to 12 months. The sale of shares shall be to the general public through the exchanges and no shares shall be sold/disposed off to the promoter/promoter group companies."

Last week, Gammon India had said its board approved further investment of up to 675 crore in its GPL by subscribing up to 2.25 crore equity shares of GPL of 10 each at a price of 300 per equity share.

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