Reliance Power shares hit 5% upper circuit limit on settling Rs 3,872 cr obligations

Reliance Power Ltd climbed 5 per cent in Wednesday's trade as the Anil Ambani-promoted company has been released and discharged of its corporate guarantee, undertakings and all obligations and claims in relation to the outstanding debt of subsidiary Vidarbha Industries Power Limited (VIPL), amounting to Rs 3,872.04 crore. 

The private sector power generation company said it settled all disputes with CFM Asset Reconstruction Private Limited (CFM), as 100 per cent shares of VIPL have been pledged in favour of CFM against the release and discharge of corporate guarantee given by Reliance Power.

As a result, VIPL has ceased to be a subsidiary and the entire obligations of the Anil Ambani-promoted Reliance Power as a guarantor on behalf of VIPL are fully settled.

Reliance Power shares climbed 5 per cent to hit its upper circuit limit at Rs 32.98 on BSE. The stock hit a 52-week high of Rs 38.07 on August 23. The stock is up 37.70 per cent in 2024 so far and 73 per cent in the past one year. 

Reliance Infrastructure, which held 23.15 per cent stake in Reliance Power as of June 30, advanced 3.31 per cent to Rs 243.45.  

Reliance Power said it has zero debt from banks and financial institutions and that its networth stood at Rs 11,155 crore on a consolidated basis, as on June 30. Rosa and VIPL would withdraw all proceedings initiated by them against CFM. Further, CFM would withdraw all proceedings initiated by it against Reliance Power and subsidiary Rosa.

Reliance Power said: "the pledge over 1,49,16,260 shares representing 100 per cent equity share capital of VIPL, created by Reliance Power Limited and its subsidiary Rosa Power Supply Company, was enforced by Axis Trustee Services as trustee for CFM Asset Reconstruction and Axis Bank Ltd, the lenders of VIPL, whereby all voting rights in respect of the shares of VIPL will solely be exercised by them along with takeover of the management and control of VIPL by the lenders."

The entire obligations of the company as a guarantor on behalf of VIPL stands fully settled, resulting in release and discharge of corporate guarantee, undertakings and all obligations and claims thereunder in relation to the outstanding debt of VIPL, amounting to Rs 3,872.04 crore, Reliance Power said in a BSE filing.