The board of directors of IL&FS approved a rights issue of 30 crore equity shares at ₹150 per share aggregating to ₹4,500 crore.

The issue will be completed by October 30.

The Board also approved the recapitalisation of group companies to the extent of ₹5,000 crore in IL&FS Financial Services, IL&FS Transportation, IL&FS Energy, IL&FS Environment, and IL&FS Education.

As on March 31, 2018, IL&FS networth was ₹7,400 crore.

Financial rejig

The Board also approved the Company’s specific asset divestment plan based on which IL&FS expects to reduce its overall debt by ₹30,000 crore.

Of a portfolio of 25 projects identified for sale, firm offers have already been received for 14 projects. The company expects to complete its divestment plan over the next 12-18 months.

“The combination of capitalisation and debt reduction through the sale of assets would serve to reduce IL&FS leverage ratio significantly.... The Board took cognizance of the fact that this situation of over-leverage and illiquidity had arisen as a significant percentage of the Group’s liquidity, aggregating to over ₹16,000 crore, was stuck in claims and termination payments,” the company said in a statement.

Tough times

“And whilst Government had taken several measures to expedite settlement and streamline the process, in the nature of these matters, it would take two to three years more to unlock these pools of liquidity for the Company. In this context, and to enhance the liquidity position of the Company, the Board also approved approaching shareholders for support to the extent of ₹9,000 crore,” it added.

IL&FS has been going through a tough time recently. It was downgraded by rating agency ICRA citing its elevated debt, slow asset monetisation and deterioration in the credit profile of its subsidiaries.

In July, Ravi Parthasarthy had resigned from IL&FS as Non-Executive Chairman. The board of IL&FS had then unanimously appointed its Managing Director Hemant Bhargava as the new Non-Executive Chairman with immediate effect at the behest of Life Insurance Corporation of India.

LIC is the largest shareholder in the private sector and unlisted IL&FS, with a total stake of 25.3 per cent. IL&FS Transportation Networks Limited (ITNL), the road development arm of IL&FS Group, had also informed stock exchanges regarding defaults in road and metro projects by nodal authorities.