New Delhi, Oct 15 In a move that could give new dimension to IFCI’s 26% stake sale, the company has given financial institutions the option of converting their “zero coupon optional convertible debentures” into equities.
“We have decided to give options to 30 bank and financial institutions to convert less than 50% of their Rs 1,479-crore zero coupon debentures into equity,” IFCI CEO and MD Atul Kumar Rai said after a board meeting here.
The remaining part of the debt, which will be more than 50%, will be given interest, the rate of which will be decided at a later stage.
“The 30 banks and institutions have only two option — either to accept the offer or reject it. Those who reject the offer will get interest at an agreed rate in 2021-22,” Rai said.
These debentures currently do not yield any coupon rate and are convertible only in 2021-22.
The company plans to float request for proposal (RPF) within a week for the stake sale and plans to complete the financial process in a couple months.
The move to give options to 30 banks and FIs will not hamper the stake sell process as all the suitors have been informed that they would get 26% post-diluted equity and not 26% of the present equity, Rai said.
Of the Rs 1,479-crore zero coupon debentures, public sector Life Corportation of India (LIC) alone has roughly 35% share. At present, LIC holds 8.3% in IFCI.
Punjab National Bank (PNB) is another public sector company which holds some debentures. Interestingly, PNB is also a part of a consortium bidding for the 26% stake.
The government has given a Rs 923-crore loan to IFCI. These debts could also be converted into equities, which would make quantum 26% post-diluted equities even bigger. However, it is not yet known as to what position the government would take after the stake sell.
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