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The government will wind down its role in Maytas Infra after having run it for about six months, a period when it failed to effectively arrest the cancellation of contracts that the company had won before the Satyam financial scandal erupted in January.
The induction of IL&FS as a strategic partner was first reported in ET NOW and carried in Monday's edition of ET.
For IL&FS, the country's largest infrastructure and finance company, winning control of the Hyderabad company will mean a foray into the contracting business, bidding for infrastructure projects with Maytas Infra and reviving tattered joint ventures.
The Company Law Board, which in February said it would not allow IL&FS a Maytas Infra board seat because the two companies are competitors, cleared a plan which it had opposed just six months ago.
Teja Raju, the eldest son of Satyam founder B Ramalinga Raju, whole-time director B Narasimha Rao, and two of the four government-nominated directors will step down from the Maytas board. IL&FS gets the right to name four directors, including the chairman.
IL&FS, which is the single largest shareholder in Maytas Infra, will control 37 percent of equity in the company, including a 22.6 percent stake pledged by the founding Raju family.
Investors cheered the announcement by corporate affairs minister Salman Khurshid, sending the IL&FS scrip higher nearly 16 percent to Rs 265.70 on the BSE. The Maytas Infra stock closed at Rs 112.80 on Monday, a gain of 5 percent for the day and a nearly four-fold increase from its March 9 level of Rs 31.40.
Maytas Infra will get Rs 55 crore in emergency cash from its new owner, which plans to raise additional funds through private share placements.
IL&FS will also make an open offer and said it intends to buy the shares pledged by the original promoters. The company has been told by CLB that it must own at least a 26 percent stake in Maytas Infra for two years.
The open offer price will be set at the two-week average share price of Maytas Infra, which is about Rs 94, a member of the IL&FS board told ET NOW.
IL&FS has sent its application to make the open offer to market regulator Sebi. "The important part is that it (the decision) has been arrived at with consensus; lenders and shareholders have come together to take this decision," Mr Khurshid said.
Investigating agencies also have prima facie evidence of fund diversion from Maytas Infra to Satyam, said Mr Khurshid.
Maytas has about Rs 3,550 crore in liabilities with about Rs 1,700 crore in bank liabilities, Rs 1,100 crore in bank guarantees and Rs 750 crore payable to vendors, the minister said. State Bank of India, IDBI and ICICI Bank are among its major lenders.
Results announced on Saturday showed Maytas Infra had posted losses of 490 crore in the 15 months to June.
Maytas Infra's order book halved to Rs 7,332 crore, even as it lost prestigious contracts, including the Hyderabad Metro Rail project. The company has around 1,500 employees, half that at the beginning of the year.
The crisis surrounding at companies run by the Raju family was trig-gered in December when Satyam announced plans to buy Maytas Infra and Maytas Properties, a real estate company run by the younger son of Mr Ramalinga Raju, but backed down quickly in the face of an investor revolt.
Mr Raju confessed in January to cooking the books at Satyam in fraud estimated at over Rs 7,000 crore. In March, the CLB allowed the government the right to name four of Maytas Infra's directors, but did not permit it to take full control of the company.
The government will soon decide who among its nominee-directors -- chairman K Ramalingam, Ved Jain, OP Vaish and Anil K Agarwal -- will continue to be on the Maytas Infra board for the next two years.
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