IL&FS hopes to raise Rs30,000 cr in asset sales to redeem debt
24 Sep 2018
Infrastructure financing company Infrastructure Leasing & Financial Services Ltd that has missed payment on more than five of its obligations since August, is seeking to raise more than Rs30,000 crore ($4.2 billion) by selling assets to cut debt, according to an internal memo.
Earlier this month, it came to light that the IL&FS group defaulted on a short-term loan of Rs1,000 crore from Sidbi, while a subsidiary has also defaulted Rs500 crore dues to the development finance institution.
IL&FS, which reported revenue of $ 2.6 billion in the year ended March 31, said in a statement that it couldn’t make interest payments due Friday on three non-convertible notes. The amounts due totalled about 376.4 million rupees, according to data compiled by Bloomberg.
While IL&FS has nearly Rs35,000 crore consolidated debt, IL&FS Financial Services has Rs17,000 crore of debt, which sits as standard asset for most of the lenders, according to a Nomura India report.
The group has seen its various long-term and short-term borrowing programmes downgraded to ‘default’ or ‘junk’ grades by credit rating agencies, even as the regulators are also probing alleged delay in disclosure about certain loan defaults.
The company, which has been categorised 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 added.
The group has seen its various long-term and short-term borrowing programmes downgraded to ‘default’ or ‘junk’ grades by credit rating agencies, even as the regulators are probing alleged delay in disclosure about certain loan defaults.
Investors are concerned that defaults by IL&FS 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 Rs490 crore of its obligations this year and has additional dues of about Rs220 crore to be repaid by end of October, according to Bloomberg data.
The Reserve Bank of India has called for a meeting with shareholders of IL & FS on 28 September, to focus on the recent set of defaults.
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.
IL&FS, which reported revenue of Rs18,900 crore in the year ended 31 March1, said in a statement that it couldn’t make interest payments due Friday on three non-convertible notes. The amounts due totalled about Rs37.64 crore.