The boards of REC Limited and Power Finance Corporation Limited have approved a scheme of merger under which REC will be merged into PFC, subject to approvals from shareholders, creditors and regulatory authorities.
“The Board of Directors of Power Finance Corporation Limited (PFC) and REC Limited (REC) today approved the Scheme of Merger (Scheme) for merger of REC (Transferor Company) into PFC (Transferee Company) and their respective shareholders and creditors, under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013,” REC Limited said on Sunday.
The proposed merger, to be undertaken under Sections 230 to 232 of the Companies Act, 2013, will create a power sector-focused financing entity with an aggregate loan book of over ₹11 lakh crore, according to a regulatory filing.
Under the approved share exchange ratio, shareholders of REC will receive 88 equity shares of PFC with a face value of ₹10 each for every 100 equity shares of REC held, with the record date to be decided later by the boards of the two companies.
The scheme is also conditional on the merged entity continuing to qualify as a government company, with the Government of India retaining majority voting rights and control, directly or indirectly.
Deloitte Touche Tohmatsu India LLP is acting as Transaction and Tax Advisor, and Cyril Amarchand Mangaldas as the Legal Advisor, to both PFC and REC.
Further, RBSA Valuation Advisors LLP was appointed by PFC, and Ernst & Young Merchant Banking Services LLP was appointed by REC, to provide joint valuation reports.
SBI Capital Markets was appointed by PFC, and Nuvama Wealth Management was appointed by REC, to provide their respective fairness opinions on the joint valuation reports.
