Debt-saddled infra lender Infrastructure Leasing and Financial Services (IL&FS), on August 29, 2018, said its board has approved a Rs 4,500-crore rights issue and it plans to reduce its loan burden by up to Rs 30,000 crores, by divesting assets in the next 18 months. The announcement comes amid reports of mortgage lender HDFC, which owns nine per cent in IL&FS, not being inclined to bail out the debt-ridden financier. State-run life insurance behemoth, LIC, is the largest shareholder, owning a fourth of the company.
In a statement, the company said its board has approved ‘a rights issue of 30 crore equity shares at Rs 150 per share, aggregating to Rs 4,500 crores, to shore up the capital of IL&FS’, which will be completed by October 30, 2018. It has also decided to infuse up to Rs 5,000 crores into group companies – IL&FS Financial Services, IL&FS Transportation, IL&FS Energy, IL&FS Environment and IL&FS Education.
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The company has identified 25 projects that it intends to sell, which will reduce its overall debt by Rs 30,000 crores, the statement said. The firm claimed that it has received offers for 14 of the 25 projects earmarked to be sold and the divestment will take up to 18 months. “The combination of capitalisation and debt reduction through the sale of assets, would serve to reduce IL&FS’ leverage ratio significantly,” it said, adding that once the programme is complete, it will be able to support the infrastructure investment needs of the country.
Acknowledging that it is in a situation of ‘over-leverage and illiquidity’, the company said it ended up in the position as a ‘significant percentage of the group’s liquidity, aggregating to over Rs 16,000 crores, was stuck in claims and termination payments’. Despite the steps taken by the government, it will take up to two to three years, ‘to unlock these pools of liquidity for the company’, it said. The company claimed it has invested over Rs 1,89,000 crores in infrastructure projects, primarily in surface transport, energy, urban infrastructure and financial services till now, which have generated over 30 million man days of construction work and six million jobs.
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