IL&FS seeks to raise Rs 300 bn in asset sales to cut debt

IL&FS seeks to raise Rs 300 bn in asset sales to cut debt
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New Delhi, Sep 24: Infrastructure Leasing & Financial Services Ltd, an Indian conglomerate that has missed payment on more than five of its obligations since August, is seeking to raise more than 300 billion rupees ($4.2 billion) selling assets to cut debt, according to an internal memo seen by Bloomberg.
The company, which has been categorized as a “systemically important” non-banking financial firm by the Reserve Bank of India, plans to sell 25 assets and has received investor interest for 14 of them, according to the note sent to employees by Vice Chairman and Managing Director Hari Sankaran. The company is satisfied with the valuation of the offers, Sankaran said. IL&FS didn’t respond to an email seeking comment on the note.
Investors are concerned that defaults by IL&FS, which has total debt of $12.6 billion — 61 percent in the form of loans from financial institutions — could spread to other shadow banks in Asia’s third-largest economy. The firm, which helped fund India’s longest highway tunnel, hasn’t been able to pay more than 4.9 billion rupees ($68 million) of its obligations this year and has additional dues of about 2.2 billion rupees to be repaid by end of October, according to data compiled by Bloomberg.
“Investors are wary about the credit issues,” said Rajesh Cheruvu, chief investment officer at WGC Wealth Management Ltd. “Few of IL&FS bonds are maturing over the next few weeks, market participants are nervous over it.”
The company’s shareholders will meet on Sept. 29 to vote on increasing the authorized share capital of IL&FS to 45 billion rupees, which “will be the starting point for the implementation of a plan to restore normalcy,” according to the IL&FS note to employees.
The Reserve Bank of India has called for a meeting with shareholders of Infrastructure Leasing & Financial Services on Sept. 28, to focus on the recent set of defaults, Bloomberg Quint reported on Sunday, citing two bankers with direct knowledge of the matter.
Separately, a unit of IL&FS re-designated its Chief Financial Officer Dilip Bhatia’s role and asked him to focus on selling assets, IL&FS Transportation Networks Ltd. said in a filing on Saturday. IL&FS Transportation manages 28 road and five other non-road projects, according to its annual report.
“Investors are awaiting concrete announcements on the sale of assets and infusion of liquidity from shareholders,” said Mahendra Jajoo, head of fixed income at Mirae Asset Global Investment in Mumbai.