TII seeks approval for investing Rs 1,760 crore in securities of CG Power and its arms

By: |
November 17, 2020 7:45 AM

TII had signed a share purchase agreement with CG Power to acquire around 57% stake for an investment of Rs 800 crore.

The Competition Commission of India (CCI) had approved TII’s proposed acquisition of shares in CG Power on October 13.The Competition Commission of India (CCI) had approved TII’s proposed acquisition of shares in CG Power on October 13.

Tube Investments of India (TII), the over Rs 38,000-crore Murugappa Group company, is seeking shareholders’ approval for a total amount of Rs 1,760 crore to be used for giving loans, investing in securities or giving guarantee to the borrowings of CG Power and Industrial Solutions, the company TII is in the process of acquiring and as well as investing in its subsidiaries.

The TII board at its meeting held on November 4, 2020, had approved the issue of corporate guarantees in favour of the proposed lenders of CG Power of up to Rs 1,400 crore and this forms part of the aggregate amount of Rs 1,760 crore proposed for shareholders’ approval, said a notice for EGM slated for November 30.

In addition to this investment, TII may have to subscribe to or purchase further securities of CG Power to consolidate its shareholding percentage, provide loans to ease its constrained liquidity position and facilitate its smooth day-to-day operations and give guarantees or security in respect of the borrowings availed or to be availed in the coming days, the notice said.

The EGM notice further said that with the various subsidiaries of the company, it may have to subscribe to or purchase securities of or provide loans to such subsidiaries, give guarantees or security in respect of the borrowings availed or to be availed by such subsidiaries about their business.

The Competition Commission of India (CCI) had approved TII’s proposed acquisition of shares in CG Power on October 13. TII had signed a share purchase agreement with CG Power to acquire around 57% stake for an investment of Rs 800 crore.

CG Power is among world’s top 10 transformer manufacturers, second in transformers and switch gears in India, and first in motors manufacture in the country. It caters to over 21 industries and has more than 20 manufacturing units. It had a domestic debt of Rs 2,161 crore as of March 31, 2020, which has now been restructured as a term loan of Rs 650 crore, a low coupon NCD of Rs 200 crore and a Rs 150 crore balance sheet item which is to be adjusted from the sale of company property.

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