IL&FS plans re­jig to get out of debt trap

Firm to sell as­sets, raise funds from its share­hold­ers

DNA Sunday (Mumbai) - - FRONT PAGE - DNA Money Cor­re­spon­dent

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.

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