APSEZ provides Shapoorji debt relief

APSEZ provides Shapoorji debt relief

Adani Ports and Special Economic Zone (APSEZ) has announced that it is set to purchase a 95 per cent majority stake in Odisha’s Gopalpur Port for a value of 13.49 billion rupees ($161.74 million) to bolster its east coast presence.

Adani Ports will purchase a 56 per cent stake in Gopalpur Port from real-estate conglomerate Shapoorji Pallonji Group (SP Group) and a 39 per cent stake from Orissa Stevedores, reported Reuters.

The acquisition is made at an enterprise value of INR 3,080 crore ($370 million), and the transaction is subject to statutory approvals and fulfilment of other conditions precedents.

Gopalpur port is located on the east coast of India and has the capacity to handle 20 million metric tonnes per annum (MMTPA). The Government of Odisha awarded a 30-year concession to GPL in 2006, with the provision of two extensions of 10 years each.

According to Managing Director Karan Adani’s statement, the acquisition will grant Adani Ports access to the mining hubs of Odisha and its neighbouring states.

“Acquiring Gopalpur port is another addition to its asset base though the deal is not large compared to the acquisition it generally makes,” Amit Jain, Chief Strategist of Global Asset Class at Ashika Group, said.

“It will only pave the way to add more freight revenue.”  

READ: APSEZ sets record cargo volumes in October

According to Bloomberg, the transaction is anticipated to avert the triggering of a bond covenant for Shapoorji, thus avoiding heightened borrowing costs. Thus, selling its stake will help alleviate the debt burden of the Indian construction group, as per Bloomberg.

After failing to sell the port by 31 December, SP Group’s unit, Goswami Infratech, was compelled to increase yields by 2 per cent to 20.75 per cent. Yields were to be increased by a further 2 per cent had the port not been sold by March-end.

Nevertheles, SP Group has initiated a review of its debt load and have contacted Houlihan Lokey to facilitate its capital structure optimisation, reported Bloomberg.

“For Shapoorji, the deal assumes significance as this should help reduce high-cost debt,” Jain continued.

In April last year, APSEZ completed the acquisition of Karaikal Port Private Limited (KPPL) under the National Company Law Tribunal’s (NCLT) approval.

More recently, APSEZ promoted CEO Karan Adani to the role of Managing Director.

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