IFCI slips 13% on govt decision to convert debentures to equity

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IFCI dips 13% on govt decision to convert debentures
IFCI: Quotes, News
BSE 27.30BSE Quote3.85 (14.10%)
NSE 27.25NSE Quote3.85 (14.13%)
The shares of the company dropped by 13% on government decision to convert debentures to equity. The Union Cabinet today approved the proposal to exercise the option by the Government to convert Rs 400 crore and Rs 523 crore Optionally Convertible Debentures (OCDs) held by Government of India in IFCI into equity at par. The conversion option will be exercised immediately.

Post exercise of conversion option of Rs 923 crore OCDs into equity at par, the holding of Government will become 55.57% and by including the holding of Banks/FIs, it will be 68.31% making it a Government company.

The Industrial Finance Corporation of India (IFCI) was converted into a company incorporated under the Companies Act, 1956 on 31.3.1993.

It was then decided that holding of Government controlled institutions in IFCI should be maintained above 51%.

The equity holding of Public Sector-Banks / Financial Institutions / Insurance Companies remained over the threshold limit of 51 percent till March 2004. Thereafter dilution in the holding took place in 2005 and it came below 51%.

To look into issues concerning IFCI and suggest a way forward, a Committee of Secretaries was constituted, headed by the Finance Secretary and comprising of Secretaries from the Departments of Economic Affairs, Expenditure and Financial Services.

The Committee, after due consideration and taking into account all the facts, has inter-alia recommended to convert the OCDs of Rs.400 crore and Rs.523 crore into equity at par and that the Government need not make an open offer to the shareholders of IFCI.

GoodReturns.in

Read more about: ifci, government, debentures, equity
Story first published: Friday, August 24, 2012, 10:18 [IST]
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