Murugappa Group’s Tube Investments of India will pick a controlling stake in scam-hit CG Power and Industrial Solutions. The two companies entered into an agreement for issuance and allotment of equity shares and warrants totaling to Rs 700 crore on Friday.

“The Board of Directors at their meeting held today have inter-alia considered and approved the execution of a securities subscription agreement with Tube Investments of India for the issuance and allotment of 642,523,365 equity shares of the company,” CG Power said in a statement to BSE on Friday.

The company added that following allotment of securities, Tube Investments will acquire control over the company and will have the right to appoint a majority of the directors on the company board.

The agreement entails 642,523,365 equity shares of the company to be allotted at the face value of Rs 2 a share and at a price of Rs 8.56 per share, aggregating to Rs 550 crore in value.

The company will also issue 175,233,645 warrants, each carrying a right to subscribe to one equity share per warrant, within 18 months from allotment. The statement said, aggregate consideration for subscribing to equity shares upon exercise of the warrants is Rs 150 crore, of which Rs 37.5 crore will be paid on warrant subscription by the investor.

The deal is subject to lenders accepting one-time settlement and restructuring of funded facilities and guaranteed debt. The company will also seek shareholder approval for the deal at an extraordinary general meeting (EGM) to be held on September 2.

CG Power hit a rough patch last year. In August 2019, the company informed the exchanges of a Risk and Audit Committee (RAC) report which detailed multiple dubious transactions at the company. The report indicated it to be an employee-led fraud. The finding later led to a Securities and Exchange Board of India (Sebi) ban on promoter Gautam Thappar for three years from accessing the capital market.