Date: 10.12.2007 The IFCI board will consider allotment of shares on conversion of its creditor banks' debt into equity on December 17. According to sources, the conversion price is about Rs 80 per share. Last week, the IFCI board allowed banks and financial institutions to convert 100% of their debt into equity. The status of debt worth Rs 1,479 crore was crucial to the process of inducting a strategic investor in IFCI through the sale of fresh equity amounting to 26% on a post-diluted basis. The board resolved issues relating to recompensation and conversion of Rs 1,479 crore held in the form of zero coupon optionally convertible debentures (ZCOCDs) by banks and financial institutions. As much as Rs 1,400 crore will be converted into equity, which translates into an additional 14 crore shares. Shares of IFCI were last trading down Rs 6.7, or 6.33%, at Rs 99.10 on the Bombay Stock Exchange. The conversion price would be calculated as per the Sebi formula of six months' average closing price. While banks have agreed to convert their entire holdings in ZCOCDs into equity, LIC, GIC and associates have agreed to convert that part of ZCOCDs into equity which would retain their holding in IFCI in percentage terms at the existing levels. Public sector insurers currently hold about 13.67% stake in IFCI. The balance amount held by LIC and other financial institutions would carry an interest rate of 75 basis points below 15-year G-Sec from the first three years and 75 basis points above 15-year G-Sec after three years post-induction of strategic investor. This is expected to cost IFCI about Rs 16 crore per annum. Public sector banks and financial institutions had converted 50% of their non-SLR investments in IFCI into 20-year debentures repayable in 2022 as a part of the exercise in 2002 to restructure the liabilities of IFCI. The government intervened again in October this year to resolve convertibility and recompensation issues to give clarity to the ongoing process of the sale of 26% in IFCI. As a result, the banks and FIs reached a consensus regarding convertibility and recompensation of the debentures. Only four of the eight shortlisted bidders have actually conducted due diligence till date. These include the Sterlite Industries and Morgan Stanley & Co consortium, the WL Ross, GS Capital Partners (VI) Fund, Standard Chartered Bank and HDFC combine, the Shinsei Bank, PNB and JC Flowers group and the Cargill Financial Services Corporation and Texas Pacific consortium. Cargill Financial Services has teamed up with Texas Pacific Group, which is a new entrant. The remaining bidders — GE Corporation, IDFC, Natixis and Blackstone Group — are yet to conduct due diligence, raising doubts over their interest in the sale. The last date of submission for financial bids has been fixed as December 14. The IFCI board is expected to announce the strategic investor by December 20.