TII to acquire a controlling interest in CG Power

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Murugappa Group Company, TII, has announced its acquisition of a controlling interest of 50.63% in CG Power and Industry Solutions. On 26 November Murugappa Group Company has announced that CG Power has become the subsidiary of the company. TII board has taken decisions regarding fundraising worth Rs.350 crore from the Azim Premji Trust and SBI Mutual Fund Schemes.

Two schemes of SBI Mutual Fund, that is SBI focused Equity Fund and SBI Magnum Midcap Fund will be getting 15.03 lakh shares and 5.46 lakh shares worth Rs. 110 crore and Rs. 40 crore respectively, while Azim Premji Trust will get 27.33 lakh shares worth around Rs. 200 crore. They are planning to conduct an extraordinary general meeting on 21st December for seeking shareholders’ approval for the allotment of shares. The company has already informed the stock exchanges that they intend to seek shareholders’ approval for Rs.1,760 crore to be used for giving loans, giving a guarantee to the borrowings of CG Power, investing in securities, and for investing in its subsidiaries.

On November 4 TII board had approved the issue of corporate guarantees in favour of CG Power’s lenders. Apart from this investment, TII was required to subscribe to further securities of CG Power for consolidating its shareholding percentage. This would help in easing its constrained liquidity position and facilitating its smooth day-to-day operations and also provide a guarantee or security in respect of the borrowings availed or to availed in the near future.

Based on the master implementation-cum-compromise settlement agreement against the total amount owned by CG Power to lenders include compromise settlement of an upfront payment of Rs. 650 crore to lenders and conversion of Rs. 200 crore into unlisted, non-convertible debentures with a time limit of five years is to be issued by CG Power to the lenders. They have also agreed for payment out of the proceeds from the sale of CG House property to the lenders within five years from the date of the agreement.

On October 13 Competition Commission of India had approved the proposal of acquisition of shares in CG Power by TII and this has emerged to be successful.

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