Il & Fs To Float Equity, Bond Issues To Fund Noida Bridge

Infrastructure Leasing and Financial Services Ltd (IL&FS) has decided to float a public issue of 5 crore shares of Rs 10 each at par to part-finance the Delhi-Noida bridge.

According to IL&FS managing director Ravi Parthasarathy, the issue is expected to hit the market by December end or early January 1999.

IL&FS is also coming out with an issue of deep discount bonds aggregating Rs 50 crore to part-finance the Rs 280 crore debt component of the project. It is expected to carry a coupon rate of about 14 per cent. The bond issue will have a repurchase option by Infrastructure Development Finance Company (IDFC).

The toll bridge project, which is estimated to cost Rs 400 crore, will have an equity base of Rs 120 crore. Besides the Rs 50 crore equity to be mopped up through the public issue, IL&FS, Unit Trust of India and Prudential Asia will pick up the rest of the equity. IL&FS' holding will be around 20 per cent.

IL&FS is negotiating with State Bank of India, Industrial Finance Corporation of India (IFCI) and Industrial Development Bank of India (IDBI) to raise the rest of the debt component. A decision on the issue is expected next week.

The move to rope in SBI, IFCI and IDBI follows the recent decision by the Asian Development Bank to pull out of the project.

Parthasarathy told Business Standard that the institution would conduct door-to-door campaigns in select areas like South Delhi, Noida and Greater Noida to market the issue to retail investors.

The door-to-door campaign proved to be extremely successful when IL&FS marketed the Ahmedabad municipal bonds issue.

IL&FS will float a special purpose vehicle for the toll bridge, which will be used for routing all the debt components of the project.

Besides, the special purpose vehicle will be entitled for all the tax benefits under Section 10(23)G of the Income Tax Act and the revised depreciation benefits under the new depreciation policy announced by the department of company affairs recently.