Reliance Power, subsidiary to raise up to Rs 1,200 cr from Varde Partners

Reliance Power and its subsidiary have entered into a memorandum of understanding with investment firm Varde Partners for the repayment of debt of up to Rs 1,200 crore, it announced on Monday.

Reliance Power said the debt will be used for the settlement and discharge, acquisition and restructuring of certain financial instruments. “Debt retirement will be subject to finalization and execution of binding documents and all required approvals, including regulatory approvals in accordance with applicable rules/laws/regulations,” the company said.

Shares of the company hit the BSE upper circuit after the announcement, at Rs 23.15 per share.

Varde Partners is a global alternative investment firm specializing in credit and credit-related assets. It manages over $13 billion in assets with teams in North America, Europe and the Asia-Pacific region.

In July, Reliance Power shareholders rejected the company’s asset monetization plan at the company’s annual general meeting. This is despite the fact that 72% of shareholders voted in favor of the special resolution to monetize its assets, while 28% voted against the resolution.

A special resolution requires 75% of shareholders to vote in favor, according to proxy advisory firms.

A report by Institutional Investor Advisory Services (IiAS) had stated that the company had defaulted on loans amounting to Rs 3,561 crore as of March 31, 2022. This was the principal amount, with interest amounting to Rs 1,783 crore.

Reliance Power’s lenders include Axis Bank, Yes Bank and State Bank of India, among others.

Earlier this year, Piramal Capital moved the National Company Law Tribunal (NCLT) against Reliance Power under Section 7 of the Insolvency and Bankruptcy Code 2016 for default in payment above Rs 500 crore.

The NCLT had asked both parties to resolve the dispute by this month.

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