InvestorQ : Why is Reliance Infrastructure increasing its stake in Reliance Power?
Tisha Malhotra made post

Why is Reliance Infrastructure increasing its stake in Reliance Power?

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Aashna Tripathi answered.
5 months ago
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The increase stake is happening through conversion of debt taken over. Reliance Power has secured shareholder approval to issue shares and warrants to the tune of Rs.1,325 crore to Reliance Infrastructure, on preferential basis. This amounted is intended to help Reliance Power reduce its stand-alone debt. In exchange, Reliance Power will allot 59.5 crore shares and 73 crore convertible warrants equivalent to as many equity shares of the company. This entire process will virtually convert the R Power debt into equity.

As a result of this deal, the stake of Reliance Infrastructure in Reliance Power will increase in phases to 38.24% post the conversion of warrants issued by Reliance Power. This will help Reliance Power to reduce its overall debt by Rs.3,200 crore, which is the part of a larger plan to make Reliance Power viable proposition.

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