Two closely held group companies to be merged with GVK Power & Infrastructure.
HYDERABAD: The GVK group has announced the consolidation of all its infrastructure businesses, including the Mumbai International Airport Pvt. Ltd. (MIAL), roads, power and mining projects, into flagship GVK Power & Infrastructure Ltd (GVKPIL). “The exercise will transform the company into a Rs 20,000 crore (asset base) behemoth making it a strong entity. This will enable us to bid for larger projects,” GVK Reddy, chairman, GVKPIL, told DNA Money. Group companies Bowstring Projects & Investments Private Ltd. (Bowstring), and Green Garden Horticulture Pvt. Ltd, both unlisted and closely-held companies that hold stakes in various power and infrastructure projects of GVK, will merge into GVKPIL.
The scheme of amalgamation approved by the respective boards envisages a share swap ratio of 133 GVKPIL shares of Rs 10 each for every four of the face value of Rs 10 each of Bowstring. Likewise, 153 shares of GVKPIL will be exchanged for every four shares of Green Garden. In addition, the GVKPIL board has also cleared a scheme of arrangement to swap three shares of the company for 40 shares of GVK Industries, held by shareholders in the latter entity. The group had undertaken a restructuring exercise prior to its public issue in February, 2006, with GVKPIL becoming the holding company of the power projects promoted by GVK Industries and Gautami Power Ltd.
While GVKPIL holds 53.96% equity in GVK Industries, IFC, Washington, holds 10% and the Asian Investment Fund 29.5%. GVK Industries operates the 436 mw Jegurupadu Phase I & II gas-based power plant in Andhra Pradesh. It also owns 44.97% (to be increased to 51% in due course) in Gautami Power (464 mw gas-based power plant) which is ready for commissioning.
Deloitte, Haskins & Sells, and Dalal & Shah worked out the valuations for the various entities involved in the amalgamation process, which will be subject to the approvals of authorities. The consolidation will create an integrated infrastructure company that will help create better shareholder value, optimise resources and grow the balance-sheet size.
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