CG Power and Industrial Solutions hit an upper circuit of 5% at Rs 41.15 after Tube Investments of India acquired a controlling stake in the company.
In a BSE filing made after market hours on Thursday (26 November 2020), CG Power said that its board approved allotment of 64.25 crore preferential shares to Tube Investments of India (TII) at Rs 8.56 each, aggregating to Rs 550 crore.
The company has also issued 17.52 crore warrants to TII for aggregate consideration of Rs 150 crore. About Rs 37.50 crore, or 25% of the aggregate consideration will be paid on warrant subscription. Each warrant carries a right exercisable by the warrant holder to subscribe to one equity share per warrant within 18 months from allotment.
"Post the allotment of securities to TII as stated above, TII has acquired a controlling interest in the company and holds 50.62% of the paid up equity share capital of the company, CG Power said in a statement.
Separately, TII said: We inform that the company has acquired a controlling interest and holds 50.62% of the issued, subscribed and paid up equity share capital of CG Power and that CG Power has, therefore, become a subsidiary of our company viz. Tube Investments of India Limited, with effect from today i.e. 26 November 2020.
Further, with effect from today, the company, viz. Tube Investments of India, has been classified as the 'promoter' of the CG Power and the board of directors of CG Power has been reconstituted pursuant to the terms of the subscription agreement.
Additionally, CG Power also announced the appointment Vellayan Subbiah, who currently is the Managing Director of TII, as the chairman of the company. Natarajan Srinivasan, a former director on Murugappa corporate boards, has been appointed as the new managing director.
M A M Arunachalam, a fourth-generation member of the Murugappa family, will also be on the board of CG Power.
The company has also appointed Shailendra Narain Roy, Sasikala Varadachari and P S Jayakumar as the independent directors on the board of CG Power.
Further, in terms of the Securities Subscription Agreement (SSA), all the existing directors of the company, i.e. Ashish Guha, Sudhir Mathur, Ramni Nirula, Jitender Balakrishnan, Narayan K Seshadri, Pradeep Mathur, Dr. Aditi Raja and Dr. Rathin Roy have tendered their letters of resignation (including from the subsidiaries of the company) which will be effective from close of business hours on the closing date i.e. 26 November 2020.
In August 2020, the lenders of CG Power and Industrial Solutions had approved the takeover bid of the company by Murugappa Group-led Tube Investments of India.
Tube Investments of India emerged the successful bidder following a Swiss challenge bidding process, which was initiated by the lenders to CG Power, after the company, on 7 August 2020, had said that its board had approved an investment of Rs 700 crore by Tube Investments for a 56.61% stake.
CG Power and Industrial Solutions is a global pioneering leader in the management and application of electrical energy. Its offerings include electrical products, systems and services for utilities, power generation and industries.
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