Monday, December 17, 2007

IFCI may fix Rs 107 for converting banks bonds into equity

IFCI, which has received financial bids from three consortia for a 26 per cent stake, is understood to have fixed Rs 107 for converting bonds of PSU banks and insurance companies into equity.

"It roughly works out to be around Rs 107 for converting zero coupon optionally convertible debentures of Rs 1,300 crore," an IFCI official said.

So, at this price the company would issue fresh equity of 12.1 crore to the banks and insurance companies who owns optionally convertible bonds maturing in April 2022.

Once a formidable institution, IFCI's financial position has been vulnerable. To bail out the institution, public sector banks and insurance companies gave money to IFCI through zero coupon optionally convertible debenture worth Rs 1,479 crore.

Meanwhile, IFCI has fixed December 17 as the relevant date for determining the price of shares to be issued to the banks and insurance companies.

The proposed equity shares would rank equal with the existing equity shares of the firm.

The institution has decided to convert all Rs 900 crore optionally convertible bonds issued to PSU banks into equity.

It has also decided to partly convert bonds worth Rs 579-crore issued to public sector insurance companies so that they retain their shares at the existing level of 13 per cent even after selling 26 per cent stake to the new partner.

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