Here is how Reliance Infrastructure’s 8 lakh shareholders may benefit

In a meeting held on Sunday, the board of directors of Reliance Infrastructure Limited (Reliance Infra) approved the subscription of preferential issue of up to 59.5 crore equity shares and up to 73 crore warrants convertible into equivalent number of equity shares of Reliance Power Limited (Reliance Power). This move is expected to create high value for approximately 8 lakhs shareholders of Reliance Infra.

The company is going to do so by conversion of outstanding debt including interest aggregating up to Rs 1,325 crore -- that is Reliance Infra’s exposure to Reliance Power inclusive of interest.

This is subject to all requisite permissions, sanctions and approvals as may be necessary.

The preferential issue by Reliance Power shall be made at an issue price of Rs 10 per share, as per SEBI (ICDR) Regulations.

After issuing equity shares, the shareholding of Reliance Infra and promoter group in Reliance Power will increase to approximately 25 per cent. In the case of post conversion of warrants, it will further increase to over 38 per cent.

Reliance Infra to get shares of Reliance Power at Rs 10 per share at par Reliance Infra and other promoters to get 38 per cent shareholding at Rs 10 per share, which is 20 per cent discount to closing price of Rs 12.50 per share.

The company further added that Reliance Infra’s shareholders will also benefit from consolidation of the financial account of Reliance Power with Reliance Infra.