Reliance Power, Reliance Infrastructure shares rise up to 7.5%; what’s driving the gains?

Here is what happened:

Reliance Power

The company announced on Wednesday that it has settled obligations worth Rs 3,872.04 crore related to the guarantee for the lenders of Vidarbha Industries Power (VIPL).

Additionally, it stated that all disputes with CFM Asset Reconstruction have been resolved, and 100% of VIPL’s shares have been pledged to CFM in exchange for the release and discharge of the guarantee provided by Reliance Power.

“VIPL ceases to be a subsidiary of the company and 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,” the company said in a stock market disclosure.

CFM became the sole creditor of VIPL after it acquired loans from lenders at Rs 1,265 crore in an all-cash deal in September last year. The company had a principal debt of Rs 2,800 crore.

Reliance Infrastructure

Reliance Infra (Reliance Infra) on Wednesday announced that the Anil Ambani-led company has made a significant reduction in its standalone external debt, bringing the amount down from Rs 3,831 crore to Rs 475 crore.

The company announced that Invent Assets Securitisation and Reconstruction Private Limited (Invent ARC), one of its lenders, has novated certain charged securities to recover its dues, resulting in a complete reduction of Invent ARC’s fund-based outstanding amount to zero.

Reliance Infrastructure also confirmed that it has fully cleared its outstanding dues to key financial institutions, including the Life Insurance Corporation of India, Edelweiss Asset Reconstruction Company Limited, ICICI Bank, Union Bank, and several other lenders. This significant debt reduction represents a major achievement for the company.

Additionally, Reliance Infra entered into a One Time Settlement (OTS) with LIC to settle all obligations related to the Non-Convertible Debentures (NCDs) issued by the company for an amount of Rs 600 crore.

Furthermore, the company has settled and paid its entire obligations to Edelweiss concerning the NCDs issued, in consideration of Rs 235 crore.

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