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The board of IL&FS Transportation, the road development arm of infrastructure and financing major IL&FS, has approved raising Rs 3,000 crore via “rights issue”.
“The proposal for issue of equity shares of face value of Rs 10/- each of the company to the existing shareholders of the company on a rights basis ('Rights Issue') up to Rs 3,000 crore was approved subject to all applicable statutory and regulatory approvals,” the company said in a regulatory filing today.
The filing said that the terms and conditions of the rights issue, including the rights entitlement ratio, issue price, issue size, record date, timing of the issue and other details would be decided in consultation with the merchant bankers at a separate meeting.
The company’s shares jumped almost 18 per cent on the announcement.
The development comes at the background of ITNL’s parent, IL&FS, approving Rs. 8,000 crore recapitalisation business plan to help the company improve its debt profile.
“IL&FS board has approved the business plan which includes the infusion of significant amount of capital - Rs 4,500 crore and another Rs 3,500 of liquidity that would allow the company to overcome around Rs 9,000 crore of claims that have got stuck and not been released for ITNL,” a person close to IL&FS who spoke on conditions of anonymity told BusinessLine .
The recapitalisation plan was approved along with the change in leadership at IL&FS. Last week, Group Chairman Ravi Parthasarathy had resigned as non-executive director of the company. Hemant Bhargava, Managing Director of Life Insurance Corporation (LIC), the largest shareholder of IL&FS with over 25 per cent exposure, had taken over as non-executive chairman.
Japan’s Orix Group, IL&FS Employees Welfare Trust, Abu Dhabi Investment Authority, HDFC, Central Bank of India, and State Bank of India are other shareholders of IL&FS.
ITNL’s consolidated debt stood at around Rs. 36,000 crore and the company would need to draw a debt of around Rs. 7,000 crore for completing the projects currently under construction, Dillip Bhatia, ITNL CFO, said in a call with analysts in May.
In the past few months, ratings agencies have multiple times downgraded the debt instruments of ITNL and its SPVs, BusinessLine has reported recently.
This week itself, ICRA have further downgraded various instruments of ITNL totalling Rs 4,570 crore while putting the rating assigned to Rs. 3,000 crore structured non-convertible debenture (NCD) programme of the company on rating watch with negative implications.
India Ratings & Research have downgraded instrument worth over Rs 2,300 crore citing delays in deleveraging.
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