GVK Power and Infrastructure Ltd said Monday that it would sell 33 percent stake in Bangalore International Airport Limited (BIAL) to Fairfax Holdings Corporation and FairFax Financial Holdings limited. The deal is valued at Rs 2,149 crore and is expected to be completed by mid 2016.
GVK will reduce its debt by Rs 2,000 crore and would reportedly save interest cost of Rs 300 core every year, the company said in a statement.
Following the announcement, GVK stock closed up 6.28 percent at Rs 7.11 in trading Monday. During the day, it had gone up by 10.3 percent once as the broader markets continued to trade dep in red.
GVK Airport Developers, which is a wholly-owned subsidiary of GVK Power and Infrastructure, had started a financing process last year, in a bid to reduce its debt to its lenders. The company received multiple offers, from which FairFax group was reportedly selected.
"This is an important and successful milestone in deleveraging our balance sheet, and all proceeds from this stake sale shall be used to bring down our debt obligations to our lenders. We chose FairFax as a partner in BIAL as we have long standing relationship with its chairman Mr. Prem Watsa and we look forward to partnering with them in developing Kempegowda International Airport through its next stage of expansion as we develop a new world-class Terminal 2 and a new runway," the company said in the statement.
Goldman Sachs, Bank of America-Merrill Lynch are the financial advisors to GVK and Cyril Amarchand Mangaldas is its legal advisor.
Bangalore International Airport handled 17.3 million passengers during the period between April 2015 and February 2016. It marked an increase of 22.6 percent over 14.1 million passengers who arrived or departed from the airport during the corresponding period in the last fiscal year.
[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]