Tube Investments of India (TII) announced on Thursday that it has completed the acquisition of a controlling interest of 50.62% in CG Power and Industrial Solutions. In a stock exchange disclosure, the Rs 38,000 crore Murugappa Group business stated CG Power has come to be a subsidiary of the business successful November 26 and its board of directors has been reconstituted.
As per the share subscription agreement of August 7, 2020, CG Power has allotted 64.25 crore equity shares of the face worth of Rs 2 at a cost of Rs 8.56 to TII for an aggregate consideration of Rs 550 crore. Besides, about 17.52 crore warrants, each and every carrying a correct exercisable by the business to subscribe to 1 equity share per warrant inside 18 months, have been allotted to TII for a subscription quantity of Rs 37.50 crore, becoming 25% of the aggregate consideration payable for subscribing to equity shares upon physical exercise of the warrants.
The TII board of directors has also authorized fundraising worth Rs 350 crore from the Azim Premji Trust and SBI Mutul Fund schemes. The business will allot shares to each entities on preferential allotment or private placement basis, TII stated in a stock exchange filing.
Azim Premji Trust will get 27.33 lakh shares worth about Rs 200 crore, though SBI Mutual Fund’s two schemes, SBI Focused Equity Fund and SBI Magnum Midcap Fund, will get 15.03 lakh shares and 5.46 lakh shares worth Rs 110 crore and Rs 40 crore respectively. Both entities will get shares at Rs 731.70 apiece, which is inclusive of a premium of Rs 730.70 per equity share. An extraordinary basic meeting will be held on December 21 to seek shareholders’ approval for the allotment.
The business had earlier informed the stock exchanges that it intends to seek shareholders’ approval for a total quantity of Rs 1,760 crore to be utilized for providing loans, investing in securities or providing assure to the borrowings of CG Power and for investing in its personal subsidiaries.
The TII board, at its meeting held on November 4, had authorized the situation of corporate guarantees of up to Rs 1,400 crore in favour of CG Power’s lenders. This types portion of the Rs 1,760 crore proposed for shareholders’ approval.
In addition to this investment, TII was necessary to subscribe to or obtain additional securities of CG Power to consolidate its shareholding percentage, offer loans to ease its constrained liquidity position and facilitate its smooth day-to-day operations and offer guarantees or safety in respect of the borrowings availed or to be availed in the coming days.
TII, CG Power and its lenders have on November 20 executed binding agreements for 1-time settlement, restructuring of funded facilities and assured debt of CG Power.
The settlement, in accordance with the master implementation-cum-compromise settlement agreement against the total quantity owed by CG Power to the lenders, consists of compromise settlement by creating an upfront payment of Rs 650 crore to lenders, conversion of Rs 200 crore into unsecured, unlisted and non-convertible debentures with a tenure of 5 years to be issued by CG Power to the lenders, and payment to lenders out of the proceeds from the sale of CG House house inside 5 years from the date of agreement.
The Competition Commission of India had authorized TII’s proposed acquisition of shares in CG Power on October 13. TII had signed a share obtain agreement with CG Power on August 7 to obtain about 56% stake for investment of Rs 700 crore and later announced an more investment of Rs one hundred crore. It had emerged the thriving bidder following a Swiss challenge bidding procedure initiated by the lenders of CG Power.
CG Power is amongst the world’s best 10 transformer producers, second in transformers and switch gears in India and initial in motors manufacture in the nation. It caters to more than 21 industries and has extra than 20 manufacturing units. It had a domestic debt of Rs 2,161 crore as of March 31, 2020.