Gammon Infrastructure Projects to divest nine projects to BIF Holdings

Gammon Infrastructure Projects (GIPL) entered into a share purchase agreement to divest nine of its project companies to BIF Holdings.The nine projects comprises of six road projects and three power projects. After this deal, the consolidated debt of the company will be reduced by 43.53 per cent to to Rs 2229 crore. The divestment will lead to reduce company's debt to equity ratio from 3.75 times to almost 2 times. GIPL stock price on BSE increased by 13.84 per cent on early trades and trading at Rs 11.93 on intraday basis.

Boulder Growth & Income Fund (BIF) Holdings is jointly held by funds managed by US-based asset management firm Brookfield Asset Management and Core Infrastructure India Fund.US-based Brookfield Asset Management is a global alternative asset manager with over USD 200 billion in assets under management as of 30 June 2015.

The assets part of the transaction includes Andhra Expressway, Rajahmundry Expressway, Kosi Bridge Infrastructure, Gorakhpur Infrastructure, Mumbai Nasik Expressway, Vijayawada GunduGolanu Road Project, Pravara Renewable Energy, Sikkim Hydro Power Ventures and Aparna Infraenergy India. GIPL's aggregate cash inflows would be approximately around Rs 563 crore after the adjustment. The company is expecting Rs 100 crore cash inflow after crystallization of certain milestones in future.

GIPL's nine projects are estimated to cost Rs 6750 crore at the time of completion out of which Rs 3097 crore has been provided as of as of March 31,2015. The outstanding debt for these projects was Rs 1718 crore. The company's net debt stood at Rs 3692 crore. Parent company Gammon India's standalone debt stood at Rs.5,185.6 crore as on 31 March 2015. The parent company also entered into corporate debt restructuring (CDR) led by its lenders in September 2013.

GIPL's total income boosted by 41.02 per cent to Rs 212.44 crore in Q3FY15 on yearly basis. The company reported net profit of Rs 3.8 crore in Q3FY15 while it had net loss of Rs 20.6 crore in Q3FY14. It witnessed turnaround in the latest quarter. GIPL also recommended divestment of 50 per cent shareholding of Vizag Seaport around Rs 62.5 crore in favour of Lastin Infrastructure Projects.

GIPL is a build-operate-transfer (BOT) infrastructure project development company with a diverse portfolio of seven operational assets and 11 projects under different stages of development spread across 13 states in India. The Company is engaged in development of infrastructure projects in core sectors, such as roads, ports and power. It also provides its services in other areas of project development, such as operations and maintenance, and project advisory services. GIPL's infrastructure projects under the road sector comprise 10 projects, while the port sector comprises of three projects, and the power sector includes five projects.