IL&FS rights issue likely to be postponed to 2019

IL&FS rights issue likely to be postponed to 2019
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New Delhi, Oct 22: The rights issue of infrastructure lending major IL&FS is likely to be pushed to March next year. Sources told Moneycontrol that the immediate priority of the new board is to look at sale of core assets to raise money.
From October 5-19, a Rs 4,500 crore issue was on offer by IL&FS, as per an exchange notification. However, the issue did not take off.
While large institutional investors like Life Insurance Corporation of India (LIC) are ready to infuse capital into the group, they are waiting for asset sales in the next 2-3 months so that the short term cash crunch can be managed effectively.
“The rights issue was still being contemplated when the management rejig happened. Also, with several new issues and more unknown information coming to the fore, a decision for shareholders to take additional risks is unlikely,” said a source close to the development.
Given that there is public money involved and some key stakeholders were also in the dark when it came to the company’s functioning, the new board intends to receive clarity on the entire picture and only then take any decision, the source added.
On October 1, the National Company Law Tribunal had approved the takeover of IL&FS board by government nominees, saying mismanagement at the crisis-ridden financier makes it a fit case for superseding the board under Article 241 of the Companies Act.
Another source said the the board is tied-up with a detailed financial review of the group’s 348 subsidiaries. In the meanwhile, the assets to be sold are being identified and only after this will a rights issue be discussed.