GMR sells $35 million highway stake to slash debt
NEW DELHI (Reuters) - GMR Infrastructure(GMRI.NS) has sold its majority stake in a highway project for about $35 million, as debt-laden companies step up sales of some assets to boost earnings in a sector struggling with a weak economy.
GMR, one of the country's best known infrastructure groups, whose interests span airports to power plants, said it had sold its 74 percent stake in Ulundurpet Expressways to the India Infrastructure Fund of IDFC Ltd (IDFC.NS).
It is the company's second sale in less than six months and more could be in the pipeline, GMR officials said.
The deal will give GMR, whose outstanding debt was at $5.7 billion as of end June, an equity infusion of $35 million and also take about $73 million worth of consolidated debt off its books.
The sale of GMR's 73 km (45 mile) highway in the southern coastal state of Tamil Nadu is the latest example of Indian infrastructure companies selling or trying to sell stakes in projects in order to reduce their debts.
India sees ramping up the construction of new roads, power plants and ports as crucial to making its businesses more internationally competitive and lifting economic growth out of its worst slowdown in a decade.
But the private sector's efforts to build new projects have been derailed by problems ranging from coal and gas supply shortages in the power sector to a throttling bureaucracy and a lack of bank funding in the roads sector.
A drop of nearly 13 percent in the value of the rupee so far this year has also raised the cost of servicing dollar loans for companies. That has tipped companies into losses and forced them to sell off assets to reduce the debt pile.
"We at GMR Group, continue to focus on creating liquidity and reducing our leveraged position, as part of the strategy of churning of assets," said Madhu Terdal, the chief financial officer of the GMR Group, in a statement.
Its rival GVK Power and Infrastructure Ltd (GVKP.NS) has asked lenders to reschedule loans worth more than $200 million to its power business and is looking to sell a stake in a unit that runs airports in Mumbai and Bangalore.
Lanco Infratech Ltd (LAIN.NS) is trying to sell stakes in its power plants. India's Jaiprakash Associates Ltd (JAIA.NS) last week announced the sale of its cement plant in Gujarat state to UltraTech Cement Ltd (ULTC.NS).
GMR shares ended up 2.1 percent on Tuesday, outperforming a flat broader market.
(Reporting by Matthias Williams; Editing by Anand Basu and Louise Heavens)
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