Power Finance Corporation (PFC) and REC merger has got the formal board approval. Both companies will merge to create a single power sector financing entity with a combined loan book of more than Rs 11 lakh crore.
The boards of both companies have approved a scheme to merge the entities along with their respective shareholders and creditors. The scheme provides for the merger of REC into PFC on a going concern basis.
Here are the key details investors and shareholders should know.
PFC-REC share swap ratio
REC shareholders will receive 88 equity shares of PFC with a face value of Rs 10 each for every 100 equity shares of REC with a face value of Rs 10 each.
The companies will announce the record date for the share swap at a later stage after their respective boards determine it.
PFC will issue the new shares to REC shareholders in accordance with the approved share exchange ratio.
Government to retain majority control in PFC-REC merged entity
REC will merge into PFC through a merger by absorption. Once the merger becomes effective, REC will be dissolved without being wound up.
The merged entity will continue to qualify as a Government Company under the Companies Act, 2013, subject to the necessary approvals. The Government of India (GOI) will continue to hold majority voting rights and retain control, either directly or indirectly.
Merger subject to approvals
The proposed merger is subject to several approvals, including those from the shareholders and creditors of both companies, as well as regulatory and government authorities.
PFC share price
The share price of PFC declined 1.35% in the morning trade from the Friday’s close. The stock has gained 21.14% in past six months.
REC shares are trading flat. The stock has gained 2.88% in last six months.