Reliance Power's shares declined as much as 5% on October 4 due to market weakness. The dip comes a day after Anil Ambani's firm announced that its board has authorized the private placement of up to Rs 4,200 crore of Foreign Currency Convertible Bonds (FCCBs) to affiliates of Värde Investment Partners.
The FCCBs would have an ultra-low annual interest rate of 5 percent. They would be unsecured and have a 10-year term, Reliance Power stated. The FCCBs would be convertible into approximately 82.30 crore equity shares of Reliance Power worth Rs 10 each at a conversion price of Rs 51, plus a premium of Rs 41 per equity share.
The conversion price is higher than the floor price, which is computed as the average of the weekly high and low closing prices for the previous two weeks. Each FCCB of $1,000,000 is 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," according to Reliance Power.
The corporate board also authorized the Employee Stock Option Scheme (ESOS), in line with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, subject to approval by the firm's members.
Today's collapse might also be linked to profit booking, as Reliance Power shares had risen 64 percent in the last month.
The multibagger stock has risen 112% year to date, more than doubling investors' cash. Over the last year, the counter has increased by more than 170 percent, while the benchmark Nifty 50 has increased by 30 percent.
Reliance Power recently issued 46.20 crore equity shares worth Rs 1,524.60 crore in a preferential issue to promoter Reliance Infrastructure Ltd and two non-promoter entities, Authum Investment and Infrastructure Ltd and Sanatan Financial Advisory Services Private Ltd (Sanjay Kothari and Meenakshi Sanjay Kothari), in order to expand its renewable energy portfolio.
A large amount of the proceeds, Rs 803.60 crore, would be used to develop the company's foothold in the renewable energy industry and other new business prospects, as well as to fulfill long-term working capital requirements.
