Murugappa Group led Tube Investments of India Limited has agreed to invest ₹700 crore in fraud-hit CG Power and Industrial Solutions Limited for 56% stake, according to a regulatory filing.
In a statement to BSE, CG Power said that the two companies have reached a securities subscription agreement (SSA) which gives Tube Investments of India Limited control over 64.25 billion equity shares of face value of ₹2 each at a price of ₹8.56/- (including premium) per equity share aggregating to ₹550 crore. This will give Tube Investments control over 50.62% of CG Power post the equity shares allotment.
Also, Tube Investments will get 17.52 billion warrants, each carrying a right, exercisable by the warrant holder to subscribe to one equity share per warrant within 18 months from the date of allotment. Aggregate of the equity shares upon exercise of the warrants is ₹150 crore. After the conversion of the warrants, the Tube Investments stake in CG Power will grow to 56.61%.
This gives Tube Investments the right to appoint majority of the directors on the board, first right to share subscription in case of issuance of shares and right to restrict any change in capital structure.
A massive financial fraud of around ₹3,000 crores was uncovered at CG Power in August 2019, following which the company board sacked its chairman Gautam Thapar, for misappropriation of company funds.
