Ambani: Steering ahead

Mumbai, Jan. 3: Reliance Energy Ltd (REL) today cleared the merger of Reliance Energy Ventures Ltd ? the holding entity for coal-based energy businesses being spun off from Reliance Industries ? with itself, but surprised investors by tweaking the swap ratio to give RIL shareholders a few more shares in REL than was earlier planned.

The REL board today proposed a swap ratio of 7.5 shares of the company for every 100 shares of REVL. Every RIL shareholder will get shares in REVL in the ratio of 1:1.

Earlier, shareholders of Reliance Industries Ltd were to have received seven shares of REL for every 100 shares held in REVL. No reason was given for the change.

The swap ratio announced by REL today has raised more questions on fractional shares and the issue is what happens if an RIL shareholder holds just 100 shares. Though company circles did not comment, it is understood that shareholders will be paid partly in cash.

“It is possible that RIL shareholders will receive six or seven shares of REL and the rest will be paid in cash,” an observer said.

In a communication to the stock exchanges, REL said that the share exchange ratio is based on the number of shares of the company held by REVL and is as recommended by the leading internatinal firm, KPMG.

According to the company, its shares held by REVL will be cancelled under the scheme of amalgamation. It added that the fully diluted equity capital of the company will remain at around Rs 228 crore excluding the impact on conversion of foreign currency convertible bonds issued by the company.

REL said that the merger of REVL with the company will eliminate dual listing of these two entities and it would also get rid of the potential holding company discount through REVL market price apart from generating increased liquidity for all Reliance Energy shareholders.

At a board meeting held on Monday, another Anil Ambani group company, Reliance Capital Ltd (RCL) approved the merger of Reliance Capital Ventures Ltd (RCVL) with itself.