- A panel of arbitrators in the arbitration process initiated by the Maldives Government (GoM) and Maldives Airport Company Limited (MACL) has ruled in favour of GMR Male International Airport Pte Ltd (GMIAL), a special purpose vehicle incorporated by Malaysia Airports Holdings (MAHB) and GMR International Ltd (GMR).

- GMIAL was incorporated in 2010 for the purpose of undertaking the rehabilitation, expansion, modernisation, operation, and maintenance of the Ibrahim Nasir airport concession in Maldives. MAHB has a 23% stake in GMIAL, while GMR holds the remaining 77%.

- Recall that the Maldivian government had terminated GMIAL’s 25-year concession agreement in November 2012, after declaring the concession agreement void due to GMIAL’s inability to collect both the airport development charges (ADC) and insurance surcharges (IS).

- Among others, the arbitration panel declared that the agreement was valid and binding and was not void for mistake or discharge by frustration.

- GoM and MACL have been ordered to pay GMIAL US$4mil by way of costs within 42 days.

- MAHB is also currently studying and assessing the amount of damages claimable by GMIAL against GoM and MACL, and will release the conclusion of the assessment to Bursa once it has been completed.

- We are positive on this, as it will enable MAHB to write back the impairment provisions, as well as the damages entitled. Note that MAHB had previously booked an impairment of ~RM70mil.

- We leave our earnings unchanged for now, pending further information from the management.

- Maintain HOLD, with a fair value of RM8.50/share. 

Source: AmeSecurities