IL&FS will seek the government’s and the regulator’s help after its shareholders deferred the group’s request for a bridge loan of Rs 3,000 crore to stave off debt defaults and a potential bankruptcy, The Times of India reported on Monday.

The daily quoted sources as saying that the management of IL&FS, the Mumbai-based infrastructure finance group which owes nearly Rs 1 lakh crore, is writing to the finance ministry and the Reserve Bank of India (RBI) about the looming crisis. The group is set to default on more commercial papers and face loan recalls after shareholders, led by Life Insurance Corporation of India (LIC) and State Bank of India (SBI), deferred the conglomerate’s request for a bridge loan at a board meeting on Saturday, the report said.

IL&FS wanted to the government to prevent the collapse of a large infrastructure builder and financier by either a bailout by state-run shareholders, or by requesting them to buy the group’s roads and tunnels, which have been put up for sale, the report quoted a source as saying. Shareholders have asked the group to dispose of some assets to tide over the crisis, the report said, adding the group has called for an emergency general meeting to approve raising authorised capital ahead of a possible Rs 4,500 crore rights issue.

IL&FS has been in talks to sell 26 build-operate-transfer (BOT) road projects to multiple investors like Lone Star, Isquared Capital and National Infrastructure Investment Fund (NIIF), among others, it has been reported. But since it would take time for the talks to bear fruit, it had decided to sell its 4,00,000 sq ft headquarters at the Bandra Kurla Complex in Mumbai for Rs 1,280 crore, it was reported last week. The group’s management had told shareholders that while they were close to monetising certain assets, they urgently needed loans to make debt repayments, it was reported. With no access to liquidity immediately in sight, some lenders are likely to recall loans and could even decide to take IL&FS to the bankruptcy court, the daily reported, adding that that till the time of going to press, the group was yet to comment on the matter.

Meanwhile, another report by the daily said the government wasn’t keen on the state-run LIC, the largest shareholder, and public sector lender SBI, bailing out the group, since it was a private company. LIC owns a fourth of the group’s equity, while Orix Corporation of Japan owns 23.5%. Other shareholders include Abu Dhabi Investment Authority, HDFC, SBI and Central Bank of India.

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