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| RNRL-Reliance Power merger gets shareholders' nod |
| Press Trust of India / Mumbai Sep 06, 2010, 13:56 IST |
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Two Anil Ambani group companies, Reliance Power and Reliance Natural Resources, today said their respective shareholders have approved merger between the two entities, estimated to create a Rs 50,000-crore entity.
Shareholders of Reliance Power and Reliance Natural Resources (RNRL) at their respective meetings held on September 4, have approved the composite scheme of arrangement between the two companies, the ADAG companies said in separate filings to the Bombay Stock Exchange (BSE).
Shares of both RNRL and Reliance Power rose following the announcement of shareholder approvals. RNRL was trading at Rs 39.80, up 2.31 per cent on the BSE, while R-Power was quoting at Rs 159.05, up 1.66 per cent from the previous close.
As per the deal approved by the boards of the two companies on July 4, RNRL would merge with Reliance Power in an all-share deal, under which RNRL shareholders for their every four shares would get one share of Reliance Power.
Post the deal, which was valued at about Rs 7,150 crore at the time of announcement, Reliance Power is estimated to have over 6 million shareholders.
The merger of RNRL will make Reliance Power a direct beneficiary of the gas deal signed with Mukesh Ambani-RIL.
The deal had come within days of RNRL signing a revised gas supply deal with RIL for power projects, which are under the charge of Reliance Power.
Following the Supreme Court decision on May 7, wherein its plea was rejected for cheaper gas from RIL, RNRL had lost much of its relevance as a business entity.
RNRL was born out of demerger of Dhirubhai Ambani's Reliance empire five years ago. The purpose of creation of RNRL was for sourcing, supply and transportation of fuels, primarily natural gas.
As per the demerger scheme, RNRL was to source natural gas from Reliance Industries and trade it to ADAG power plants, including the proposed mega 7,800-MW Dadri unit near here being set up by R-Power.
The combined entity would have a networth of over Rs 16,000 crore.
In a statement issued today, Reliance Power said that the merger would allow RNRL shareholders to participate in the future growth prospects of Reliance Power's diversified generation portfolio of over 35,000 mega watt, and its substantial coal reserves in the country and abroad.
The scheme will also facilitate gas supply under RNRL's Gas Supply Master Agreements with RIL to Reliance Power and accelerate the implementation of its plans for setting up over 8,000 MW of gas based power generation capacity.
Besides, it will increase the prospects for gas from RNRL's coal bed methane (CBM) blocks and will enhance the cost efficiency for fuel supplies through its coal supply logistics and shipping business.
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