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Infrastructure Leasing & Financial Services Ltd (IL&FS) has secured shareholders approved for its plans to raise money through debt and equity after its recent debt defaults which lit concerns about contagion in the financial markets.
The company said in a filing that the stockholders have accepted IL&FS’s plans to raise as much as Rs. 15,000 crores through a non-convertible debt issue, increase the firm’s borrowing capacity by 40% to Rs. 35,000 crores and improve its share capital to enable a rights offering.
IL&FS’s investors include Life Insurance Corporation (LIC), State Bank of India (SBI), Housing Development Finance Corporation (HDFC) and Japan’s Orix Corporation. V.K. Sharma, the chairman of biggest shareholder LIC, on Friday said the beleaguered group can raise Rs 60,000 crore by selling assets.
The firm which finances infrastructure projects across the country and is considered systemically important by the central bank has defaulted on commercial paper from August and has caused major 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 on Saturday appointed Alvarez & Marsal to devise a restructuring plan that will be implemented upon approval by the board and stakeholders.
