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Share sale by L&T Finance, Edelweiss group companies illegal: Reliance Group

IANS  |  Mumbai 

The Anil Ambani-led Reliance Group on Friday termed as "illegal and excessive" the open market sale of shares of Reliance Group invoking the pledge from 4.2.2019 to 7.2.2019 by L&T Finance and some entities of Edelweiss group.

Refuting the charge L&T Finance said it followed due process of contract and law.

In a statement issued here, Reliance Capital said: "A few NBFCs, substantially L&T Finance and certain entities of Edelweiss Group, have invoked pledge of listed shares of Reliance Group and made open market sales of the value of approximately Rs 400 crore from 4.2.2019 to 7.2.2019."

"The purported exercise of rights to enforce the security is illegal and excessive, and against the process and requirements of the respective borrowings' documentation," Reliance Group said.

"The illegal, motivated and wholly unjustified action by the above two groups has precipitated a fall of Rs 13,000 crore, an unprecedented nearly 55 per cent, in market capitalisation of Reliance Group over just these four days, causing substantial losses to 72 lakh institutional and retail shareholders, and harming the interests of all stakeholders," the statement said.

According to Reliance Group, the manner of conduct of the above open market sales, without any orderly market disposal through a bid or structured process for shares comprising the holding of the promoter group, is also illegal on several counts like price manipulation, insider trading, front running and market abuse.

The Reliance Group claimed the sale by L&T Finance and others is in violation of various regulatory provisions, including the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, which are applicable to all persons (including NBFCs) dealing in listed securities, whether on invocation of pledge or otherwise.

The statement said group company Reliance Communications (RCOM) has announced plans for debt resolution through the National Company Law Tribunal (NCLT) and there was no adverse impact of this unrelated RCOM proposal on Reliance Capital Ltd., Reliance Infrastructure Ltd. and Reliance Power Ltd.

According to the statement, Reliance Capital Ltd., Reliance Infrastructure Ltd. and Reliance Power Ltd. (and their various subsidiaries) are performing satisfactorily on all operating parameters, and there is no change whatsoever on any aspect as compared to the position prevailing prior to these sales.

On its part L&T Finance refuted and denied allegations it had granted loans against pledge of shares to Reliance Group companies.

"As per loan and pledge agreements, borrower did not cure various events of defaults including providing margin for shortfall in the stipulated security cover. Despite various notices in the past few months, events of defaults continued," L&T Finance said in a statement.

"Consequently, L&T Finance enforced its rights of invocation and sold pledged shares to the extent of its outstanding dues by following the due process of contract and law," the statement said.

--IANS

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, February 08 2019. 22:48 IST
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