GMR Infra shares jump 6% on plan to divest stake in Mactan-Cebu airport

Shares of GMR Infrastructure rallied 6% in the intraday trade on Friday after the infrastructure major said that it signed a deal with Aboitiz InfraCapital for divestment of its stake in Mactan Cebu International Airport. The company in an exchange filing said that GMR Airports International BV (GAIBV), a step down subsidiary of GMR Infrastructure, has entered into definitive agreements with Aboitiz InfraCapital Inc (AIC), the infrastructure arm of Philippines-based Aboitiz Group, to offload shares in GMR-Megawide Cebu Airport Corporation (GMCAC). The transaction is subject to customary regulatory approvals in the Philippines.

GMCAC, which is a joint venture between GAIBV and a Philippines-based conglomerate Megawide Construction Corporation (MCC), is the developer and operator of Mactan Cebu International Airport (MCIA), the second busiest airport in the Philippines.

Following the announcement, shares of GMR Infrastructure rose as much as 6% to hit a high of ₹40.7 on the BSE during the session so far. The infra stock opened a tad higher at ₹38.65, against the previous closing price of ₹38.40 on the BSE.

At the time of reporting, the stock was trading 2.9% higher at ₹39.90 levels, while the BSE Sensex was quoting at 58,756, down 11 points. The share price currently trades 15% lower than its 52-week high of ₹46.84 touched on January 15, 2022, while it hit a 52-week low of ₹28.21 on September 13, 2021.

The largecap stock has gained 31.5% in the last one year, while it has delivered a negative return of 12.5% in the current calendar year 2022. The counter has risen 13% in one month and 14% in the last one week. It traded higher than 5-day, 20-day, 50-day, 100-day, and 200-day moving averages.

GMR Infra in an exchange filing on September 2 said the company has decided to divest its stake in Mactan Cebu International Airport to reduce the debt of its airport arm, GMR Airports Limited (GAL). The GMR Group also aims to rebalance its airport portfolio to focus on high-growth opportunities and reinforce GMR Airport’s commitment to churn assets for higher returns on investment.

Commenting on the divestment, Srinivas Bommidala, business chairman – International Airports, GMR Group, says, “The decision to divest our stake in GMCAC is also in line with GMR Airport’s strategy to focus on deleveraging and redeploying capital in high growth opportunities. Further, we have strengthened our position in the Asia Pacific Region by partnering with AP2 in developing and operating the Kualanamu International Airport at Medan, Indonesia.”

As per the exchange filing, the sales pact involves GMCAC’s issuance of primary shares and the transfer of secondary shares from Megawide and GAIBV to AIC amounting to Philippine peso (PhP) 9.5 billion, which will result in the latter owning 33 and 1/3% minus 1 share stake in GMCAC.

“Simultaneously with the above, the transaction likewise involves the issuance by Megawide and GAIBV of Exchangeable Notes for PhP 7.75 bn each aggregating to an amount of PhP 15.5 bn (Notes). The Notes will mature on 30th October 2024 and will be exchanged by AIC for the remaining 66 and 2/3% plus 1 share of GMCAC’s outstanding capital stock,” GMR Infra says in a BSE filing.

The transaction will be undertaken at an enterprise value of PhP 49.7 billion (₹70.5 billion) and GAIBV will receive an upfront amount of PhP 9.4 billion (₹13.3 billion) in lieu of the shares being transferred, and Notes being issued, it said.

GMR, who will continue to operate as the technical services provider to GMCAC until December 2026, would also be entitled to additional deferred consideration based on the subsequent performance of GMCAC for the same period.