Cautious buyers stall debt-laden IL&FS's bid to sell subsidiaries

In the last few weeks, IL&FS directors met potential investors, trying to hard sell all key assets — from its swanky office building in Mumbai to its listed road construction company — to pare the debt worth Rs 910 billion by half.

But the desperate bid failed as buyers turned cautious after group companies started defaulting on loans.

An offer was even made to sell the road construction company — IL&FS Transportation Networks Ltd (ITNL) — at zero equity value by IL&FS — provided its debt worth Rs 345 billion as on March 2018 is taken over by the buyer.

But potential buyers did not go ahead with the transaction as they wanted more clarity on the financial metrics, said a banker close to the development.

Moreover, another hurdle was IL&FS’s entire stake in ITNL, which operates 32 special purpose vehicles, was pledged to banks. ITNL was the first company to start defaulting since June this year — leading to a domino effect on IL&FS.