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Axis Bank, Maldives start talks on GMR loan recovery

The Axis Bank-led consortium has initiated the arbitration process with the Maldives government for recovering the loans granted to GMR Infrastructure, which stand at about $160 million.

The Axis Bank-led consortium has initiated the arbitration process with the Maldives government for recovering the loans granted to GMR Infrastructure, which stand at about $160 million. The banks had granted this sum to GMR for the infra major?s Male airport project, which later ran into a political controversy, following the termination of the deal.

GMR?s arbitration talks ? a separate one ? with Maldives are set to happen in London on April 10. GMR is looking to get the contract reinstated, or else get compensated to the tune of $800 million.

The Maldives government had given a sovereign guarantee to the lenders in case of termination of the contract. The $529-million Male airport involved a debt component of $358 million. The consortium of Axis Bank and Indian Overseas Bank had given $160 milion, of which 84% was given by Axis Bank.

The direct agreement between the lenders? consortium and the Maldives government says that in case of termination of the contract, the Maldives government will have to pay the damages to the banking consortium in 60 days. The contract was terminated by the Maldives government last year.

An Axis Bank spokesperson and another senior official declined to comment on the issue.?The banking consortium had sent a notice to the Maldives government for terminating the airport last November.

The GMR Male International Airport (GMIAL) is pursuing a third arbitration case at the Singapore High Court relating to its dispute with the Maldives government over collection of an?airport?fee, a case that precedes the decision to terminate the concession.

The Maldives government has agreed to abide by the laws of English court or Singapore in the event of a dispute. The three separate arbitration processes are happening simultaneously under these laws.

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First published on: 05-04-2013 at 00:26 IST
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