Shareholders say they will decide on rights issue after board’s deliberations at the meeting on Oct. 8
All eyes are on the first board meeting of Infrastructure Leasing & Financial Services’ (IL&FS), as shareholders said a decision would be taken on the rights issue after the board’s deliberations. The board meeting is scheduled for October 8. Shareholders are looking forward to the steps that the new board would be taking to address the liquidity issue and raise resources to tide over the cash crunch. On Monday, the government decided to dismantle the previous board of IL&FS, and constituted a new board with six members that included bureaucrats and industry specialists. Uday Kotak has been appointed as the non-executive chairman of the board, which has members from the bureaucracy and industry. Large shareholders of IL&FS such as Life Insurance Corporation (LIC), State Bank of India (SBI) and the Housing Development and Finance Corporation (HDFC) reacted positively as they said the move would improve market sentiment. V.K. Sharma, Chairman of LIC, the largest shareholder of IL&FS with 25.34% stake, said that the insurer had always supported institutions in difficult times. “It is a very positive development, it will help the market and it will help IL&FS also,” Mr. Sharma told The Hindu . “The new board has taken over and we have to see what way they move forward. We have always been positive for institutions and we will remain positive. We have always been with the institutions in difficulty,” he said. State Bank of India (SBI) Managing Director Arijit Basu said a decision on the rights issue would be taken after the board meeting of IL&FS. SBI has 6.42% stake in IL&FS. IL&FS is planning to raise Rs. 4,500 crore through a rights issue in which it will be issuing 30 crore equity shares at Rs. 150 per share. “The move is expected to improve market sentiment and the market will view the development positively. The market will now believe the issues will now be addressed,” Mr. Basu said. Another large shareholder of IL&FS, HDFC, which has 9.02% stake in the company, said it would wait to see the rights issue offer before deciding. “I think it will give lot of confidence to the market because the market will now sense that the government is acting,” Keki Mistry, vice-chairman, HDFC, said. When asked if HDFC would participate in the right issue, Mr. Mistry said, “We have to look at everything, what offer they are making, what price. We have to wait and see.” Interestingly, the previous board of IL&FS, which met on October 29, decided on comprehensive restructuring of the company by a specialist agency.
Source : https://www.thehindu.com/todays-paper/tp-business/ilfs-investors-await-boards-roadmap/article25106909.ece