| Govt hands over Maytas Infra to IL&FS | |
| BS Reporters / New Delhi/mumbai September 1, 2009, 0:15 IST | |
Mumbai firm to raise stake to 37%, make open offer.
 Nearly six months after taking over control of Maytas Infra, the government today allowed infrastructure major IL&FS to replace the B Ramalinga Raju family as promoters of the crisis-hit company.
“IL&FS will be the new promoter of Maytas Infra,” Corporate Affairs minister Salman Khurshid announced today.
The change of ownership will take place through a mix of direct equity holding and foreclosure of pledged shares. IL&FS, which currently holds 14.5 per cent shares directly in Maytas, has been allowed to foreclose its rights on 22.6 per cent pledged shares, which would take the total holding of the Mumbai-based infrastructure company to 37.1 per cent.
IL&FS will spend around Rs 150 crore to acquire the 22.6 per cent stake and plans to announce an open offer in a day or two, which will be around the current market price. After making the public announcement, IL&FS will have to wait for 21 days for Sebi’s approval. Since the whole process will be cleared by the CLB, a counter offer is unlikely.
Even before Khurshid went public with the information, the Maytas Infra stock surged five per cent to hit the upper circuit at Rs 112.80 on the Bombay Stock Exchange. It also hit the upper circuit on the National Stock Exchange.
OWN GOALS
(How Maytas Infra changed promoters) |
| December 16, 2008: Satyam Computer Services Limited makes an abortive bid to acquire 51 per cent of Maytas Infra and 100 per cent of Maytas Properties. |
| March 13, 2009: OP Vaish and Ved Jain appointed directors of the company by the Company Law Board. |
| April 9: K Ramalingam appointed chairman and Anil K Agarwal as director. |
| April 17: Board discusses business plan and holds talks with IL &FS Chairman Ravi Parthasarathy. |
| July 7: AP government cancels the Rs 12,1 32 crore Hyderabad Metro Rail Project after it failed to achieve financial closure. |
| July 18: Board says the company is stable. |
| August 29: Maytas reports Rs 430 crore net loss for the financial year ended March 31, 2009. |
| August 31: IL &FS replaces Raju family as promoters. |
The company will also provide liquidity support of Rs 55 crore over the next three months. IL&FS said it would raise fresh capital at an appropriate stage through a qualified institutional placement (QIP) issue.
Maytas Infra today reported a loss of Rs 16.28 crore during the first quarter of the current financial year as against a profit of Rs 20 crore during the corresponding period last year.
At 12.15 pm, Maytas Infra informed the Bombay Stock Exchange that its board had sought from the Company Law Board (CLB) change in the management. Just 50 minutes later, the company announced that CLB had approved the proposal.
Under the CLB order passed today, IL&FS will hold a minimum of 26 per cent in Maytas for two years and exercise management control over it. The largest shareholder in Maytas Infra, IL&FS has been permitted to appoint four directors, including the chairman, the CLB order said.
The Maytas board will meet in Hyderabad tomorrow to take stock of the situation following the CLB order.
Following the appointment of the new directors, Teja Raju, son of Satyam Computer Services’ tainted-founder B Ramalinga Raju and Maytas promoter-director, will quit the board along with another director B Narasimha Rao. Of the four government directors on the Maytas board, Khurshid said the government will recall two of its nominees and the other two will continue.
The CLB in its order today said that Maytas will submit a quarterly report on the affairs of the company to the two nominee directors, who will serve for two years.
Earlier this year, the government appointed four nominee directors on Maytas board to revive the company that was hit by an accounting scam in Raju-founded Satyam Computer (see table).
An IL&FS statement today described Maytas’ crisis as “collateral damage”. As a result of the problems with Satyam Computers -- after Ramalinga Raju confessed to the biggest accounting scandal in Indian corporate history on January 7 -- Maytas lost several orders, including the prestigious Hyderabad Metro project because of its inability to tie up finances within the stipulated deadline. The company also owes vendors Rs 750 crore.
The IL&FS statement said it would infuse liquidity and raise fresh capital through qualified institutional or private placement routes in order to bring its financial position on a par with its operational needs and growth.
The IL&FS statement added that the company would develop an operating plan for Maytas, go in for joint bidding for infrastructure projects and revive relationships with joint venture partners.
At a recent presentation by the Maytas board, principal lenders to company, ICICI Bank, IDBI Bank and State Bank of India invited IL&FS to take a strategic role in the company and help in its revival.
Today’s CLB order also extended the date for the Annual General Meeting of the company to December 31, 2009.
On accusations that the company siphoned out funds of money, Khurshid said: “There is no evidence of Satyam money flowing into Maytas.” However, he said there are possibilities of money having gone from Maytas to Satyam.
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