The beleaguered Infrastructure Leasing and Financial Services Ltd (IL&FS) is moving fast to make the most of the breathing room granted by the National Company Law Appellate Tribunal (NCLAT) when it stayed all proceedings against the crisis-hit firm and its 348 subsidiaries. On Monday, its newly-constituted board appointed three advisors to prepare and execute a resolution plan for the company.
In a statement, IL&FS said that investment banking firms Arpwood Capital and JM Financial have been appointed as the financial and transaction advisors to guide the new board on solutions for resolution for the crisis-burdened IL&FS. The two agencies will also undertake valuations across divestment and monetisation.
Meanwhile, Alvarez and Marsal, appointed by the company's previous board to formulate a turnaround strategy, has been elevated as the restructuring advisor. The turnaround specialists will be assisting Uday Kotak and the other board members in maintaining strict controls and managing liquidity on a day-to-day basis at all levels in the group, IL&FS said. It will also evolve a plan for the management of stakeholders while implementing the final revival plans.
As of March 2018, IL&FS owed over Rs 91,000 crore to banks and other creditors, and has been downgraded to junk status by rating agencies after it defaulted on debt repayments due to a liquidity crisis. It needs an immediate capital infusion of Rs 3,000 crore and is also planning a Rs 4,500-crore rights issue. However, sources told Moneycontrol that the latter is likely to be pushed to March next year, since the immediate priority of the new board is to look at the sale of core assets to raise funds.
After the Mumbai bench of National Company Law Tribunal (NCLT) ousted IL&FS' previous board earlier this month, it had directed the new board comprising industry professionals to submit a roadmap for the company before the bench by October 31, the next scheduled date of hearing. "We are confident that the new management will come up with a roadmap for the revival of the company," a government official told Reuters yesterday but clarified that the Centre "will not give any money from its budget".
State-owned firms own nearly 40% of the company. The source added that IL&FS' revival plan could include selling big stakes in its businesses, including IL&FS Financial Services and IL&FS Energy Development, or even "closing" them.
With agency inputs