Murugappa Group takes over CG Power, appoints directors

New Delhi: Chennai-based Murugappa Group on Thursday took over scam-hit CG Power and Industrial Solutions, infusing Rs 700 crore into the company and appointing directors on its board.

CG Power in a stock exchange filing said the company board at its meeting on Thursday issued 64.25 crore shares of Rs 2 at a price of Rs 8.56 (including premium) per share aggregating to Rs 550 crore to Tube Investments of India Ltd (TII). Also, TII, a Murugappa Group firm, have been issued 1.52 crore warrants, each carrying a right exercisable within 18 months, for aggregate consideration of Rs 150 crore.

"Post the allotment of securities, TII has acquired a controlling interest in the company and holds 50.62 per cent of the paid-up equity share capital of the company," it said.

TII paid Rs 5.87 crore towards subscription of equity shares and 25 per cent upfront consideration for warrants. TII will eventually hold a 56.61 per cent stake once all warrants are converted into equity.

In a separate filing, TII said, "with effect from today i.e. November 26, 2020, the company, viz. Tube Investments of India Limited has been classified as the 'promoter' of the CG Power and the board of directors of CG Power has been reconstituted."

CG Power said its entire board including non-executive chairman Ashish Guha and whole-time executive director Sudhir Mathur have resigned.

Murugappa Group has appointed six members on the CG Power board, with Vellayan Subbiah, who currently is the Managing Director of TII, as its chairman. Natarajan Srinivasan, a director on Murugappa corporate board, has also been appointed as the new Managing Director. M A M Arunachalam, a fourth general member of the Murugappa family, will also be on the board of CG Power.

Three independent directors - Shailendra Narain Roy, Sasikala Varadachari and P S Jayakumar- have also been appointed on the company board, it said. Others who resigned from the CG Power board included Jitender Balakrishnan, Narayan K Seshadri, Ramni Nirula, Pradeep Mathur, Aditi Raja and Rathin Roy.

The takeover follows lenders to CG Power agreeing to a one-time loan restructuring. CG Power had total debt of Rs 2,161 crore, out of which a consortium of 14 banks have taken a haircut of Rs 1,100 crore and restructured the remaining.

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