Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / News/  Murugappa Group's Tube India makes winning bid for CG Power in Swiss challenge
BackBack

Murugappa Group's Tube India makes winning bid for CG Power in Swiss challenge

The bid is, however, subject to the approval of the Competition Commission of India and also the lenders, said the company in a stock exchange notification

Mint had reported on 13 August that if the Tube India bid is finally accepted, lenders will recover only about 45% of their loans outstanding (Mint)Premium
Mint had reported on 13 August that if the Tube India bid is finally accepted, lenders will recover only about 45% of their loans outstanding (Mint)

Murugappa group's Tube Investments of India Ltd has been declared as the successful bidder for acquiring the majority stake in stressed power equipment maker CG Power and Industrial Solutions Ltd, the company said in a stock exchange filing on Friday night.

Tube emerged the successful bidder following a Swiss challenge bidding process, which was initiated by the lenders to CG Power, after the company had on 7 August said that its board had approved an investment of Rs700 crore by Tube Investments for a 56.61% stake.

The bid is, however, subject to the approval of the Competition Commission of India and also the lenders, said the company in a stock exchange notification.

“Lenders of CG Power and Industrial Solutions Limited have today (28th August, 2020) communicated to Tube Investments of India Limited (TII) by their Letter of Intent that, upon conclusion of the Swiss Challenge bid process launched under the auspices of the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions 2019, they have declared TII’s offer as the successful offer and TII as the successful bidder, subject to compliances with all the conditions stated in the said Letter of Intent, to the satisfaction of the lenders," said the notification.

Mint had reported on 13 August that if the Tube India bid is finally accepted, lenders will recover only about 45% of their loans outstanding. This had prompted banks to seek proposals from other interested parties under the Swiss challenge method that throws open a bidding process to entities that want to offer a better price for the asset, the report said.

At the end of March 2019, CG Power’s debt stood at Rs2,485.5 crore, according to its annual report. Bankers to the company include State Bank of India, Axis Bank, Bank of Maharashtra, Corporation Bank, Canara Bank, ICICI Bank and IDBI Bank.

The lenders entered into an inter-creditor agreement on 11 August under the Reserve Bank of India’s stressed asset resolution framework and hired SBI Capital Markets Ltd as an adviser.

Earlier this month, CG Power said it has reached a securities subscription agreement with Tube Investments to sell 64.25 billion shares at Rs8.56 each for a total of Rs550 crore. This will give Tube Investments a 50.62% stake in CG Power.

Tube Investments will also be allotted 17.52 billion warrants, convertible to an equal number of shares within 18 months from the date of allotment, for Rs150 crore. After the conversion of the warrants, the Tube Investments stake in CG Power will grow to 56.61%.

In August last year, CG Power said its board discovered “significant accounting irregularities", including suspect transactions that have led to an understatement of the company’s liabilities and advances to related and unrelated parties by hundreds of crores of rupees. It had said that advances to related and unrelated parties and the Avantha Group may have been potentially understated by Rs1,990.36 crore and Rs2,806.63 crore, respectively. Following these allegations, its chairman Gautam Thapar was sacked.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

ABOUT THE AUTHOR
Gopika Gopakumar
Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D.C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016.
Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 29 Aug 2020, 02:18 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App