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A majority of lenders to the Anil Ambani-led Reliance Group has agreed to an in-principle standstill not to sell any of the promoters’ pledged shares till September, 30, 2019.
The agreement ensures that lenders, who have taken the group’s equity shares as collateral, would not enforce security and sell any of the promoters’ pledged shares on account of lower collateral cover or reduced margin due to the recent unprecedented fall in share prices of the group’s listed entities. According to sources close to the company, Reliance Group has committed to pay the principal and interest to the lenders, as per the scheduled due dates specified in the loan agreements.
The group has also appointed investment bankers to place a part of its direct 30 per cent shareholding in Reliance Power Ltd to target institutional investors, according to sources. The roadshow for the same is expected to start next week.
The sources added that the value of the promoter stake in Reliance Power, before the unprecedented fall in share prices earlier this month, was more than ₹2,500 crore, sufficient to clear more than 65 per cent of the total promoter borrowings. As Reliance Infrastructure holds 40 per cent equity in Reliance Power, majority stake and control would remain with the Anil Ambani Group even after placement of its holding by the promoters.
The group has, in total, nine lenders at the promoter level, with some of the key lenders being Templeton MF, DHFL Primeamerica MF, Indiabulls MF, IndusInd Bank and YES Bank.
The group has around ₹1,000-crore borrowings from Indian mutual funds, with Franklin Templeton having 90 per cent of the MF exposure. The fund has publicly supported Reliance Group promoters, labelling the transaction as “adequately covered”.
Reliance reacts
When contacted, a Reliance Group spokesperson said: “We are grateful to our lenders for believing in the intrinsic and fundamental value of our companies, and granting their in-principle approval to standstill arrangements.
Earlier this month, two lenders of the group – Edelweiss and L&T Finance – sold pledged shares in the open market to make up for the fall in collateral after share prices of Reliance Group companies fell sharply after the board of Reliance Communications decided to file for bankruptcy proceedings in the NCLT.
The move by Edelweiss and L&T Finance led to a near 55 per cent drop in the group’s market capitalisation, Reliance Group said, claiming the move was “illegal and motivated”.
According to the sources, the loan exposure of L&T Finance to the Group is now nil while that of Edelweiss is at ₹150 crore.
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