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Tube Investments gets board nod to infuse another Rs 100 cr in CG Power

The firm has already committed Rs 700 crore to CG Power

Topics
Tube Investments | CG power

T E Narasimhan  |  Chennai 

engineering, manufacturing
The proposed investment is in addition to about Rs 700 crore approved for investment in the equity shares and share warrants of CG Power by TIIs Board of Directors on August 7, 2020.

The Murugappa Group's of India Limited (TII) has got an approval from its Board of Directors to infuse an additional investment of about Rs 100 crore in and Industrial Solutions. The proposed investment is in addition to Rs 700 crore approved for investment in the equity shares and share warrants of The Murugappa Group firm says its operational, financial and governance capabilities and experience will help remove the present difficulties faced by and create value for both

TII today informed BSE that Board of Directors of the Company at the meeting held today approved an additional investment in 68,728,522 equity shares of CG Power and Industrial Solutions Limited (CG Power) to be issued to TII at Rs 14.55 per equity share on a preferential issue basis. The additional investment into CG power is being proposed in order to meet the additional funding requirements of CG Power and is subject to necessary corporate authorisations and statutory approvals.

After subscription to the equity capital including additional investment and conversion of Warrants,the shareholding of TII will be 886,485,532 equity shares representing around 58.58 per cent of expanded issued and subscribed share capital of CG Power.

The additional investment of about Rs 100 crore will be in the form of cash consideration by way of investment through subscription in the equity shares of CG Power, said the company. The investment and issue and allotment of equity shares on a preferential basis are subject to the approval of shareholders of CG Power and approval of Competition Commission of India, said the company.

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The proposed investment is in addition to about Rs 700 crore approved for investment in the equity shares and share warrants of CG Power by TIIs Board of Directors on August 7, 2020.

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. Since both the are in the engineering business, the acquisition is expected to provide synergy for both the companies, said the company.

TII remained the sole bidder, with no new suitors coming forward under the Swiss Challenge method. Lenders proposed to conduct the sale via the Swiss Challenge Method which is an open bid process favouring the highest offer. The company ran into trouble last year when its board discovered large accounting irregularities. Its chairman Gautam Thapar was subsequently forced to leave.

The business of CG Power is in the industrial and power sectors. It has 13 manufacturing facilities and employs over 3,000 people directly and 8,000 people indirectly. Company's revenue in 2019-20 stood at Rs 3,169.48 crore as compared to Rs 5,355.60 crore, a year ago.

First Published: Wed, September 02 2020. 14:00 IST
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