Mumbai: Debt-saddled infra lender IL&FS on Wednesday said its board has approved the ₹ 4,500-crore rights issue and it plans to reduce its loan burden by up to ₹ 30,000 crore by divesting assets in the next 18 months.
The announcement comes amid reports of mortgage lender HDFC, which owns 9% in Infrastructure Leasing and Financial Services (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 ₹ 150 per share aggregating to ₹ 4,500 crores to shore up the capital of the IL&FS", which will be completed by 30 October.
It has also decided to infuse up to ₹ 5,000 crore into group companies—IL&FS Financial Services, IL&FS Transportation, IL&FSEnergy, IL&FS Environment and IL&FS Education.
The company has identified 25 projects that it intends to sell, which will reduce its overall debt by ₹ 30,000 crore, 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 ₹ 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 ₹ 1,89,000 crore 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.