Workers labor at a construction site in Amargarh, Jammu and Kashmir, India. (Photographer: Dhiraj Singh/Bloomberg)

IL&FS Plans To Divest Assets, Cut Debt By Up To Rs 30,000 Crore

Debt-saddled financier Infrastructure Leasing and Financial Services said its board has approved a Rs 4,500 crore rights issue and plans to reduce its loan burden by up to Rs 30,000 crore by divesting assets in the next 18 months.

The announcement comes amid reports of mortgage lender HDFC Ltd., which owns 9 percent in IL&FS, not being inclined to bail out the debt-ridden financier. State-run life insurance behemoth LIC is the largest shareholder owning one fourth of the company.

The company said its board has approved a rights issue of 30 crore equity shares at Rs 150 per share, in a press statement. It has also decided to infuse up to Rs 5,000 crore into group companies - IL&FS Financial Services, IL&FS Transportation, IL&FS Energy, IL&FS Environment and IL&FS Education.

Also read: The Rise And Stumble Of IL&FS

It has identified 25 projects that it intends to sell, which will reduce its overall debt by Rs 30,000 crore, the statement said. The firm claimed that it has received offers for 14 of the 25 projects earmarked to be sold.

Acknowledging that it is in a situation of “over-leverage and illiquidity”, the lender said over Rs 16,000 crores were stuck in claims and termination payments.

The company said it will take up to two to three years “to unlock these pools of liquidity for the company” despite the steps taken by the government.