Crisis-ridden IL&FS starts process to monetise assets; to sell stake in financial services assets

Debt-laden Infrastructure Leasing and Financial Services (IL&FS) has started work on plans to sell off assets, part of a wider restructuring of the group, the company said on Monday.

In a bid to monetise its assets, crisis-ridden IL&FS on Monday initiated the process for divesting its stake in IL&FS Securities Services and ISSL Settlement & Transaction Services.

The board of Infrastructure Leasing &Financial Services Ltd (IL&FS) appointed by the NCLT had submitted to the Ministry of Corporate Affairs a report on the progress and the way forward, which in turn was submitted to the NCLT.

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Accordingly, the board has decided to solicit expressions of interest to assess the interest for a sale of its stake in IL&FS Securities Services and ISSL Settlement &Transaction Services.

The release further said that in order to ascertain market interest, and to examine feasibility of maximisation of value in an orderly and transparent manner, the board, while continuing to evaluate all options, on Monday initiated the process of exploring the sale of an asset engaged in the securities services business.

"The board has appointed Arpwood Capital Pvt Ltd and JM Financial Ltd as Financial &Transaction Advisors, along with Alvarez & Marsal as Resolution Consultants," said the company.

IL&FS Group and its companies have defaulted on many debt instruments due to insufficient funds.

Representational image. Reuters.

The group's total debt stood at Rs 94,215.6 crore as on 8 October 2018.

The firm needs an immediate capital infusion of Rs 3,000 crore and is also planning a Rs 4,500-crore rights issue.

The board, the release added, is "cognizant" that these steps are required to advance the process for putting together resolution plan(s) for the IL&FS group, based on market interest and price discovery for various assets.

Any binding transaction for the sale of assets, as well as the resulting resolution plan(s), will be subject to requisite approvals (including the NCLT) before the transactions are implemented.

IL&FS Securities Services is a professional clearing member in equity and other derivatives while ISSL Settlement & Transaction Services is engaged in providing professional clearing services in the commodities derivatives segment.

The government took control of IL&FS, a major infrastructure financing and development company, last month after it defaulted on some of its debt, triggering wider concerns about risk in the rest of the country’s financial system.

Late last month, a new government-appointed IL&FS board submitted a plan to revive the group to a company law tribunal paving the way for a potential restructuring.

The Ministry of Corporate Affairs is representing the government and the IL&FS board at the National Company Law Tribunal (NCLT).

The NCLT had told the ministry that the holding company will have to make all its 346 subsidiaries part of the resolution plan within 15 days.

Previously, the company had said the new board would finalise and implement its plans in stages over the next six to nine months subject to market and economic conditions.

The court will hear an update on the plans on 3 December.

--With inputs from agencies