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

Debt will be used for settlement and discharge, acquisition and restructuring of financial instruments, says company

Reliance Power along with its subsidiary has entered a memorandum of understanding with investment firm Varde Partners for availing debt of up to Rs 1,200 crore, it said on Monday.

Reliance Power said the debt will be used for settlement and discharge, acquisition and restructuring of certain financial instruments. "The drawdown of the debt will be subject to finalization and execution of binding documents and all requisite approvals including regulatory approvals as per applicable rules/ laws/ regulations," the company said.

The company’s stock hit the upper circuit on the BSE following the announcement, at Rs 23.15 a share.

Varde Partners is a global alternative investment firm specialising 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, the shareholders of Reliance Power had rejected the company's asset monetisation plan at the company's annual general meeting. This was despite 72 per cent shareholders voting in favour of the special resolution to monetise its assets, while 28 per cent had voted against the resolution.

A special resolution requires 75 per cent of shareholders to vote in its favour, according to proxy advisory firms.

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

Lenders to Reliance Power include Axis Bank, Yes Bank and State Bank of India among others.

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

The NCLT had asked the two sides to settle the dispute by this month.