Marred by a string of defaults, Infrastructure Leasing & Financial Services Ltd., has said the company will sell assets and raise funds from shareholders in order to stay afloat. It further added that it will pursue a moratorium under the Companies Act to devise a restructuring plan that works for both creditors and shareholders.
The company has devised a three-pronged strategy to take the cash-crunched company out of trouble. In a video shared to Quint, the Vice Chairman and Managing Director of the company Hari Sankaran said that the first phase of the plan will be to complete the rights issue and enable the company to recapitalize itself.
In the second part, it will "sell assets built over the last few decades to ensure value can be up-streamed and used to repay creditors". And, finally, the third part will be to get a "liquid allocation to support repayment of debtors till assets sales begin."
The default of over Rs 9000 crore by infrastructure company and its subsidiaries have triggered fears across all NBFCs of the country. The government has tried to ensure a good sentiment in the market while promising enough liquidity in the markets.
On Friday, the Reserve Bank of India has urged its large shareholders, including Life Insurance Corporation of India, Japan's Orix Corporation and Abu Dhabi Investment Authority, to check the defaults.
The government-owned State Bank of India has also not clarified on its strategy to help out the beleaguered firm. VK Sharma, LIC Chairman on Friday also said they are not ruling out the option of participating in the rights issue or infusing further capital in IL&FS. However, the insurer would require to need the insurance regulator's approval to raise its stake to more than 25 percent.
The Japanese Orix Corporation has also agreed to subscribe to the issue which is expected to be completed towards the end of October. Apart from the rights issue, IL&FS told that it is considering asset monetization, short-term bridge financing through cash infusion and also plans to seek a moratorium from creditors.
