IL&FS plans rejig to get out of debt trap
Firm to sell assets, raise funds from its shareholders
Mumbai: The troubled Infrastructure Leasing and Financial Services Ltd (IL&FS) has chalked out a “comprehensive restructuring plan” to raise funds from shareholders and offload assets it built over the last few decades in order to pay up its mounting liabilities and return to solvency.
Soon after a closed-door annual general meeting (AGM) with more than two dozen shareholders, IL&FS vice chairman and managing director Hari Shankaran said the company’s priority was to execute a successful rights issue, and sales of assets, mostly road construction projects. He said in a video shared by the company that IL&FS is planning to arrange liquid allocation to support repayment of their debtors till the asset sales cycle begins.
IL&FS will also pursue a moratorium under the Companies Act to come up with a restructuring plan that works for both creditors and shareholders. The first part will be to complete the rights issue and enable the company to re-capitalise itself, according to Shankaran. It plans to raise up to Rs 4,500 crore through a rights issue.
The second part will be to sell assets, while the third part will be to get liquid allocation to support repayment of debtors till its assets sales begin, said Shankaran.
Reuters quoted him as saying that he is “very hopeful” to meet the shareholders’ expectations, adding that their strategies were explained in some detail to them. The company is also in talks with lenders to open a fresh line of credit, seek an extension for upcoming debt payments, and secure bridge financing to avoid further defaults.