Tube executes guarantee agreement for loan of Rs 1,365 crore taken by CG Power from SBI

By: |
December 22, 2020 12:15 AM

This follows TII board of directors' approval for providing guarantees by the company in favour of the lenders of CG Power and the subsequent nod of the shareholders obtained at the extraordinary general meeting on November 30.

This follows TII board of directors' approval for providing guarantees by the company in favour of the lenders of CG Power and the subsequent nod of the shareholders obtained at the extraordinary general meeting on November 30. This follows TII board of directors' approval for providing guarantees by the company in favour of the lenders of CG Power and the subsequent nod of the shareholders obtained at the extraordinary general meeting on November 30.

Tube Investments of India (TII), the new owner of CG Power and Industrial Solutions, executed a guarantee agreement in favour of State Bank India (SBI) and SBICAP Trustee Company, in respect of the borrowings availed by the latter for an aggregate amount of Rs 1,365 crore.

This follows TII board of directors’ approval for providing guarantees by the company in favour of the lenders of CG Power and the subsequent nod of the shareholders obtained at the extraordinary general meeting on November 30.

TII said that though CG Power is going through a financial crunch at present, it has a robust business model and, with the support of steady credit lines as being firmed up presently. The operations of CG Power will stabilise and turnaround saw within a reasonable period, which would enable CG Power to service and satisfy fully all its debts by itself without any need for the lender of CG Power to seek recourse to the guarantee of TII.

“TII considers that its operational, financial and governance capabilities and experience will help remove the present difficulties and hardships of CG Power and facilitate create value creation for both TII and CG Power. While the guarantee will be reflected as a contingent liability in the books of TII, we wish to clarify that in light of the aforesaid, TII does not foresee any impact to itself arising from the guarantee furnished,” TII said in a disclosure to the stock exchanges.

TII has also bought additional shares in CG Power. Consequent to the aforesaid acquisition the shareholding on a fully diluted basis has increased by 1.97% from 56.61% to 58.58%.

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