Gautam Adani led Adani Group’s on Monday entered into an agreement to acquire the debt of GVK Airport Developers and in turn will acquire controlling interest, with a cumulative shareholding to 74 per cent.

Adani Airport Holdings Ltd (AAHL) after the acquisition of GVK’s stake in Mumbai airport to become the country’s biggest private airport operator.

According to a regulatory filing, Adani Airport Holdings Ltd (AAHL), the flagship holding company of Adani Group for its airport business, “has entered into an agreement to acquire the debt of GVK Airport Developers Ltd (ADL) in Mumbai International Airport Ltd (MIAL), which will be converted into equity stake.

This conversion would lead to Adani Group getting all of 50.5 per cent stake of GVK Group.

“The Adani Group will also take steps to complete the acquisition of a 23.5 per cent equity stake from ACSA and Bidvest in MIAL for which it has obtained the CCI approval. Upon the acquisition of the debt of GVK ADL, Adani Group will take steps to obtain necessary customary and regulatory approvals, as may be required, to acquire controlling interest in MIAL,” the filing said.

GVK ADL is the holding company through which GVK Group holds 50.50 per cent equity stake in the Mumbai International Airport Limited (MIAL), which in turn holds 74 per cent equity stake in the Navi Mumbai International Airport Limited.

The GVK Group and AAHL have agreed that AAHL will offer a stand-still to GVK, in addition, to release of the guarantee given by GVK Power and Infrastructure Limited with respect to the debt acquired by it.

Adani Group said it will also “take steps to complete the acquisition of a 23.5 per cent equity stake from ACSA and Bidvest in MIAL for which it has obtained Competition Commission of India (CCI) approval.”

“Upon the acquisition of the debt of GVK ADL, Adani Group will take steps to obtain necessary customary and regulatory approvals, as may be required, to acquire controlling interest in MIAL,” it said.

In a separate filing, GVK said it has “agreed to cooperate with Adani Airport Holdings Ltd (AAHL)” under which the Adani Group firm will acquire debt from various lenders including a Goldman Sachs led consortium and HDFC.

The two firms did not give details of the financial terms.

Adani said it will infuse funds into MIAL as well as help achieve financial closure of Navi Mumbai International Airport so as to commence its construction. MIAL holds 74 per cent interest in the airport.

GVK Reddy, founder and Chairman, GVK said, “The aviation industry has been severely impacted by COVID-19, setting it back by many years and has impacted the financials of Mumbai International Airport Ltd.

It was therefore important, that we bring in a financially strong investor in the shortest possible time to improve the financial position of MIAL, as well as to help achieve financial closure of the Navi Mumbai International Airport project, which is a project of national importance.”

“When the transaction is consummated, which is subject to customary approvals, we would be reducing a significant portion of liabilities to our lenders, which is of utmost importance to the group,” he said.

Adani Group had in March 2019 agreed to acquire 13.5 per cent stake of South African company, Bidvest for Rs 1,248 crore. However, GVK Group blocked the deal claiming the right of first refusal.

GVK, however, could not bring money to the table to buy Bid Services Division Mauritius’ (Bidvest) stake and the matter went to court.

With GVK Group’s finances under strain, it has now come around to the idea of selling the stake to Adani Group.

After seaports, Adani Group is betting big on the airports sector and has won the bids to run six Airport Authority-built non-metro airports in Lucknow, Jaipur, Guwahati, Ahmedabad, Thiruvananthapuram, and Mangalore.

It has now entered the country’s second busiest airport.

ACSA owns 10 per cent in MIAL and the balance 26 per cent stake is held by the Airports Authority of India (AAI).

In October, debt-laden GVK Group entered into an agreement to sell 79 per cent of its stake in GVK Airport Holdings for Rs 7,614 crore to the Abu Dhabi Investment Authority (ADIA), Canada’s Public Sector Pension (PSP) Investments, and state-owned National Investment and Infrastructure Fund (NIIF).

Proceeds from this transaction were to be used by GVK to primarily retire the debt obligations of its holding companies.

GVK said has “notified ADIA, NIIF and PSP that the transaction documents stand terminated as it is no longer effective and implementable.”