IVRCL share price soared as much as 11 per cent in the early trade on Monday after the debt-laden infrastructure firm decided to split its engineering procurement construction (EPC) and assets business – land and Build Operate Transfer (BOT) – to float two separate companies.
In a BSE filing, the company said the board has decided to convene a shareholders’ meeting to approve the conversion of part of the debt into equity shares of the company pursuant to invocation of strategic debt restructuring by joint lenders forum.
At 10.04 am, the share price of IVRCL was trading 5.44 per cent up at Rs 9.69. The scrip opened at Rs 9.50 and had touched a high and low of Rs 10.20 and Rs 9.50, respectively, in trade so far. Later, the share price of the company closed 4.79 per cent at Rs 9.63.
“To carve out the business of the company into ‘EPC Company’ and ‘Assets Company’ which includes Land/BOT and other assets, by way of Scheme of Arrangement subject to receipt of “No objection letter” (NOC) from the lenders/Joint Lenders Forum, approval of High Court of Andhra Pradesh and Telangana and any other approvals as may be required,” IVRCL said in a filing.
The company felt that the spinning off of EPC business would enable investment by potential equity investors.
On December 1, the company said the Joint Lenders Forum (JLF) held on November 26, 2015, the lenders invoked Strategic Debt Restructuring (SDR) in the company.
Last year, it recast its Rs 7,300 crore debt under CDR package. Strategic debt conversion option will give lenders the right to convert their outstanding loans into a majority equity stake if the borrower fails to meet conditions stipulated under the restructuring package and take control of the company operations.
In the past one year, the share price of IVRCL fell 39.74 per cent to Rs 9.15 on December 18. Sensex fell 5.93 per cent during the same period.
For the quarter ended September 2015, IVRCL posted net loss of Rs 305.46 crore, down 62.86 per cent, against net loss of Rs 187.56 crore in the corresponding quarter a year ago.
(With inputs from PTI)