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December 21, 2007 |
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IFCI LTD: Calls Off 26% Stake Sale; Shares Plummet IFCI Ltd has called of its plan to sell 26% of the company's shares after it rejected the financial proposal submitted by the consortium of Sterlite Industries and Morgan Stanley and Co., various reports say. As reported yesterday by the Troubled Company Reporter-Asia Pacific, IFCI's board of directors turned down the bid of Sterlite-Morgan Stanley for the 26% stake, saying that the conditional offer is unacceptable. The Sterlite-led consortium emerged as the front-runner in the race for the stake. Other bidders include the consortia of Cargill Financial Services Corporation and Texas Pacific Group; and Shinsei Bank Ltd, PNB and JC Flowers & Co. The Economic Times, citing unnamed sources close to the development, previously reported that the Sterlite consortium offered a INR107-per-share minimum price at which institutional shareholders will convert their debt into equity. The management control was the reason behind deal being called off, moneycontrol.com quoted CNBC-TV18 in a report. Thomson Financial News, citing the Times, relates that the Sterlite-led consortium was seeking a guarantee from IFCI to ensure that any further dilution in IFCI stake be undertaken with their consent, which was unacceptable to IFCI. After IFCI made clear that it is not going to pursue sale talks with any bidders, scrapping the entire stake-sale plan, its shares price plummetted to what Bloomberg News described as “the biggest drop in more than a decade.” IFCI shares fell INR23.3, or 23%, to INR76.75 at the close on the Bombay Stock Exchange on Dec. 20, wiping out INR12.9 billion (US$325 million) from the company's market value, Bloomberg reported. IFCI Limited -- http://www.ifciltd.com/ -- is established to cater the long-term finance needs of the industrial sector. The principal activities of IFCI include project finance, financial services, non-project specific assistance and corporate advisory services. Project finance involves providing credit and other facilities to green-field industrial projects (including infrastructure projects), as well as to brown-field projects. Financial services covers a range of activities wherein assistance is provided to existing concerns through various schemes for the acquisition of assets, as part of their expansion, diversification and modernization programs. Non-project specific assistance is provided in the form of corporate/short-term loans, working capital, bills discounting, etc to meet expenditure, which is not specifically related to any particular project. Its investment portfolio includes equity shares, preference shares, security receipts and government securities. * * * As reported in the Troubled Company Reporter-Asia Pacific on April 3, 2007, India's Credit Analysis & Research Ltd. retained a CARE D rating to IFCI's Long & Medium Term Debt aggregating INR91.36 crore. The amount represents the outstanding non- restructured amount under the Bonds series, which have been rated by CARE. Fitch Ratings, on June 29, 2006, affirmed IFCI's support rating at '4'. The outlook on the rating is stable. |
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