Reliance Power to convert Rs 1,325 cr Reliance Infra debt into equity

Reliance Power will issue shares and warrants worth Rs 1,325 crore to group company Reliance Infrastructure to convert the latter’s outstanding loan and interest into equity, the Anil Ambani-led companies said on Sunday.

The decision taken by the board of the two companies of the cash strapped-Reliance Group is aimed at reducing the debt of Reliance Power which has defaulted on debt repayment to lenders.

“This will reduce Reliance Power standalone debt by Rs 1,325 crore and along with planned debt reduction in subsidiaries, Reliance Power consolidated debt will reduce by Rs 3200 crore in FY22,” the company said.

Reliance Power had earlier said that the company reduced its debt by Rs 3,108 crore in 2020-21 after which the company’s consolidated debt was around Rs 25,000 crore.

Reliance Power will make a preferential issue of upto 59.5 crore equity shares and upto 73 crore warrants convertible into equivalent number of equity shares of the company at an issue price of Rs 10 each, in lieu of the loan from Reliance Infrastructure. The issue price is at a 21.5% discount to Friday’s close of Reliance Power shares at Rs 12.74 each at BSE.

The promoter group holding in Reliance Power will increase to 25% after the issue of shares and to over 38% upon the conversion of the warrants, from 9.06% now.

On Sunday, the Reliance Power board also approved enabling provision for issue of foreign currency convertible bonds and securities through qualified institutions placement. All the decisions taken by the board are subject to all requisite permissions and approvals.

A week ago, Reliance Infrastructure announced its plan to raise Rs 550 crore by issue of shares and convertible warrants to Minneapolis-based fund manager Värde Investment Partners LP and an Anil Ambani-led Reliance Group entity on Sunday, as a part of its plan to reduce debt.