Shares of Reliance Power fell to a 5 percent lower circuit on October 4 amid market weakness. The slump comes a day after the Anil Ambani-promoted company said its board has approved the issue of up to Rs 4,200 crore worth of Foreign Currency Convertible Bonds (FCCBs), on a private placement basis, to affiliates of Värde Investment Partners.
The FCCBs would have an ultra-low cost interest of 5 percent per annum. They would be unsecured and have a tenure of 10 years, Reliance Power said. The FCCBs will be convertible into approximately up to 82.30 crore equity shares of Rs 10 each of Reliance Power at the conversion price of Rs 51, including a premium of Rs 41 per equity share.
The conversion price is at a premium to the floor price calculated as the average of the weekly high and low of the closing prices during the two weeks preceding the relevant date. Each FCCB of $ 1,000,000 equivalent to Rs 4,197.50 crore
"We hereby inform you that the board of directors at its meeting held today i.e., on Thursday, October 03, 2024, has approved inter-alia issue of up to $500 million ultra-low cost interest of 5 percent per annum, unsecured, 10-year long tenure Foreign Currency Convertible Bonds (FCCBs), on private placement basis to affiliates of Värde Investment Partners, LP," Reliance Power said.
The company board also approved the Employee Stock Option Scheme (ESOS), by the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, subject to the approval of the members of the company.
Today's slump can also be attributed to profit booking as Reliance Power shares have soared 64 percent in the past one month.
The multi-bagger stock has surged 112 percent year-to-date, more than doubling investors' capital. In the past 12 months, the counter has zoomed over 170 percent, compared to a 30 percent rise in the benchmark Nifty 50.
Recently, Reliance Power allotted 46.20 crore equity shares worth Rs 1,524.60 crore via a preferential issue to promoter Reliance Infrastructure Ltd and two non-promoter entities namely Authum Investment and Infrastructure Ltd and Sanatan Financial Advisory Services Private Ltd (Sanjay Kothari and Meenakshi Sanjay Kothari), to expand its renewable energy portfolio.
The company intends to use a substantial portion of the proceeds, Rs 803.60 crore, towards expanding its presence in the renewable energy sector and other new business opportunities, including meeting the long-term working capital requirements.
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