ICICI Bank Challenges MIAL's Rs.3,240 Crore Rights Issue In Bombay High Court Over Contractual Violations
ICICI Bank Challenges MIAL's Rs.3,240 Crore Rights Issue In Bombay High Court Over Contractual Violations
The matter will be heard on 21 July before Justice RI Chagla
ICICI Bank has challenged the proposed rights issue of Mumbai International Airport (MIAL) in the Bombay High Court, citing violation of prior contractual agreements and risks, diluting lenders' interests.
The dispute arose from loans secured by a stake in MIAL. The bank argued that the rights issue would dilute the value of shares pledged against $1.25 billion loans sanctioned to the GVK Group, which owned MIAL. (In 2021, the Adani Group took over 97.97 percent of MIAL from GVK).
Acting through its Bahrain branch as a facility agent for a consortium of lenders, ICICI Bank approached the high court to restrain MIAL from proceeding with Rs.3,240 crore rights issue.
The bank alleged that the issue breached the terms of an interim solution undertaking (ISU) and a 2017 share pledge agreement, prohibiting any dilution of pledged equity without the lender's consent.
Earlier, two loan facilities were extended to GVK Coal Developers (Singapore). While $1 billion was provided in September 2011, $250 million was given in March 2014. The lenders included Bank of Baroda, Bank of India, Indian Overseas Bank and Canara Bank.
The loans were secured by a pledge of 32 percent equity in GVK Airport Holdings (GVKAHL), representing a 16.16 percent indirect stake in MIAL. GVKAHL (now part of the Adani Group) holds a 50.5 percent stake in MIAL, Adani Airport Holdings has 23.5 percent and the Airports Authority of India holds 26 percent. The rights issue was offered in a 27:10 ratio.
ICICI Bank submitted that the proposed rights issue would reduce the stake to 4.37 percent, undermining the security provided under the loan agreements. Approved by MIAL's board on 12th June, it offers 3.24 billion equity shares at Rs.10 each to existing shareholders.
ICICI Bank stated that GVKAHL informed the bank of its decision not to subscribe to the issue on 5 July (just five days before the offer's closing date), citing a lack of funds. The bank alleged the delay was deliberate and prejudicial to the lenders' interests. It raised concerns that the issue price of Rs.10 per share did not reflect fair market value and was the minimum permissible price.
The bank has sought a permanent injunction against the rights issue and interim relief to prevent any share allotment or action that could affect the pledged equity. It also urged that any subscription received for the rights issue should be kept in a separate account until the matter was resolved.
The lenders are being represented by Trilegal Partner, Siddharth Ranade and Senior Counsel Venkatesh Dhond.
Rashmikant and Partners and Senior Advocate Vikram Nankani are assisting some respondents.
