Mumbai: Infrastructure Leasing & Financial Services Ltd (IL&FS), whose recent debt defaults sparked concern about contagion in the financial markets, secured a lifeline after shareholders approved its plans to raise money through debt and equity.

Stockholders green-lit IL&FS’s plans to raise as much as 15,000 crore through a non-convertible debt issue, hike the firm’s borrowing limit by 40% to 35,000 crore and increase its share capital to enable a rights offering, the company said in a filing.

Also read: IL&FS AGM: Company outlines three-pronged strategy to tackle financial crisis

The firm finances infrastructure projects across the world’s fastest-growing major economy and is considered systemically important by the central bank. Its defaults on commercial paper from August sparked concern among households holding mutual funds invested in such debt, and forced banks and mutual and pension fund managers to brace for further losses.

IL&FS’s investors include Life Insurance Corp., State Bank of India, Housing Development Finance Corp. and Japan’s Orix Corp. V.K. Sharma, the chairman of biggest shareholder LIC, on Friday said the beleaguered group can raise 60,000 crore by selling assets.

IL&FS on Saturday appointed Alvarez & Marsal to devise a restructuring plan that will be implemented upon approval by the board and stakeholders.

Also read: NBFC sector likely to face shake-up after IL&FS default

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

Close