Shashi Ashiwal

Stake talk: Mr Madhu Terdal (right), Executive Vice-President & CFO, (International Business), GMR Group, and Mr Y.M. Shivamurthy, President, Legal Affairs, at a press conference in Mumbai on Wednesday. —

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Mumbai, June 25 Hyderabad-based GMR Infrastructure Ltd has acquired 50 per cent stake in Intergen, a power company based at Burlington in the US, for $ 1.1 billion.

The company acquired the stake from AIG Highstar Capital II fund. The acquisition is subject to clearances under the US antitrust laws. The deal is expected to close in the third quarter of 2008.

GMR will jointly own Intergen with the Ontario Teachers’ Pension Plan (Teachers’). Teachers’ has been a 50 per cent owner of Intergen since 2005. With $108.5 billion in net assets, it is the largest single-profession pension plan in Canada.

Intergen is an independent power producer with operations in the UK, Mexico, the Philippines, Australia and the Netherlands. It has a turnover of $1.65 billion and EBITDA of $ 613 million for the year ending December 2007. It has ownership interest in 12 operating power plants with gross capacity of 8,258 MW and 4,822 MW of assets under development. The average age of operating plants is 5.5 years.

GMR Infra has taken a bridge loan of $1.1 billion from a consortium of five domestic banks, including Axis Bank and Canara Bank to fund the acquisition.

Talking to the media on Wednesday, GMR Group’s Chief Financial Officer, Mr Ashutosh Agarwala, said that the bridge loan has a two-year tenure; therefore there is no pressure on the company to refinance it immediately. The promoters of the GMR group will partly bear acquisition cost from their personal cash reserves, while the company decides on the course of action to take for the bridge loan, he said.

Mr Madhu Terdal, Executive Vice-resident (International Business), said that the acquisition is most cost-competitive at $ 360,000 per MW, which is half the current cost of a similar facility. The US sub-prime crisis had also helped in getting the stake in the company at a lower cost , he said.

Mr Terdal said that global best practices of the power industry would be available for GMR due to the acquisition. Earlier, the GMR group could not compete in ultra mega power projects due to the size of the group and balance-sheet.

Now, it can bid for the mega projects. Due to partnership with Teachers pension plan, it will have access to the capital. It will also help bring down the cost of equity to the group, he said.

Mr G M Rao, Chairman of GMR Group in a statement said that the acquisition would provide a platform for GMR to expand in InterGen’s existing geographies and in new markets too.

On the BSE, the share touched a 52-week low of Rs 94 during Wednesday trading. At the close of market hours, the share was traded at Rs 99.15, up 3.12 per cent over the previous day’s close of Rs 96.15.

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