The Telegraph
According to the report, the new board feels the resolution options could involve significant capital infusion, divestments and debt restructurings at the group level, business vertical or at an asset stage.
The first option, the report pointed out, would involve significant capital infusion from credible and financially strong investor(s) with a condition that they along with the new board engage with the creditors for a final resolution on a group-wide basis.
However, it cautioned that a group-level resolution may be complex and the suitors will need to demonstrate sufficient capability, commitment and the wherewithal to execute it.
On sale via verticals (such as roads, real estate or power), the report said it could involve exploring solutions involving all assets, companies or special purpose vehicles (SPVs) comprising a specific business segment on a combined basis. It feels interest for the vertical-level resolution is expected to be more given that focussed participants exist for different asset classes in the country.
On the asset-by-asset solution, it said it could be explored through methods such as significant capital infusion either from existing or new investors, their monetisation or resolution with the creditors. Assets that do not get good offers may have to be liquidated.
At the NCLT hearing on Wednesday, the counsel for MCA told the division bench that debt at the IL&FS group now stands at Rs 94,216 crore. Of this, the exposure of PSU banks (both secured and unsecured) is Rs 35,382 crore.
According to the report, the group earlier operated as a single enterprise with no boundaries of legal entities and separate managements. This was one of the key governance shortcomings that led to a large contagion impact on creditors of the group.
The government-appointed board of IL&FS has shortlisted three options to rescue the infrastructure financier. These include resolutions for the group as a whole or at the level of the business verticals or individual assets.
While the plan will be implemented in stages or parts, the new board will work towards the final resolution over the next 6-9 months, subject to market and economic conditions. It has not ruled out the possibility of some early outcomes or part resolutions over the next 60-90 days, for which it will seek the approval of the National Company Law Tribunal (NCLT).
These are some of the key highlights of the “Report on Progress and Way Forward” presented by the new ILFS board which has met four times since October 1.
This report has been submitted to the ministry of corporate affairs (MCA). The counsel for the MCA shared this report with the NCLT on Wednesday.