Murugappa group to invest 700 crore rupees in CG Power

MUMBAI: The Indian company of the Murugappa group will invest 700 crore rupees to acquire 51% stake in CG Power and Industrial Solutions, a scam, the exchanges informed on Friday.

CG Power has informed the stock exchanges that its board of directors has approved the signing of a securities subscription agreement with Tube Investment, which will result in an investment of Rs 550 crore in shares and Rs 150 crore in convertible warrants over the years. Next 18 months.

The transaction is being submitted to Tube Investment, an emerging winner of the Swiss challenge process CG Power lenders will undertake by August 28. This process allows other potential suitors to make a counterbid, after which the first investor, in this case Tube Investment, has the opportunity to match the highest bid.

The agreement with the Murugappa group of Rs 40,000 crore is also subject to the acceptance by the lenders of a single settlement and the restructuring of the financed facilities and the secured debt. The transaction would also require the approval of the respective shareholders and the Indian Competition Commission.

“If any of the conditions precedent set out in the SSA are not met, the SSA will be terminated and the preferential award will be canceled in accordance with the terms of the SSA,” said CG Power.

CG Power said there would be a new issue of 64.25 crore shares, with a par value of Rs 2 each, priced at Rs 8.56 each. CG shares are currently trading around Rs 11 on the Bombay Stock Exchange.

The Mumbai head office has been in the spotlight for more than a year since it was revealed that there had been financial irregularities, involving the embezzlement of money from the company to other companies in the group. , by promoter Gautam Thapar and other key executives. ET was the first to report that the company appointed law firm Vaish Associates, which found that at least nine probable hijackings had been made, resulting in a loss of Rs 3,000 crore to CG. Since then, a new board of directors has taken control of management and removed Thapar and then CFO VR Venkatesh from their respective positions for their alleged role in financial fraud; Managing Director KN Neelkant has resigned. The case is under investigation by the Serious Fraud Investigation Office and the Securities and Exchange Board of India.

Lenders from CG Power, a consortium led by the State Bank of India, have been reluctant to make new loans, except for operational purposes, to the cash-strapped and loss-making company. CG Power, which provides electrical and industrial equipment and solutions, has an order book worth Rs 2,853 crore, but its ability to execute has been limited due to liquidity issues. The Murugappa group is present in construction and engineering and therefore there may be synergies between the two companies.

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