Allaying investors’ concerns over acquisition of the government’s stake in REC, Power Finance Corporation (PFC) Thursday said it has not yet decided on definitive pricing of the deal and its impact cannot be assessed at this stage.
“Currently, PFC has not agreed to a definitive pricing for acquiring government’s stake in REC, and the figures being discussed in various media reports are purely speculative in nature.
“The actual transaction price will be known once the modalities of the deal are decided by PFC in discussion with the government and in compliance with applicable law,” PFC said in a BSE filing.
The company has been receiving queries from various investors regarding capital adequacy subsequent to the transaction.
In this regard, PFC said: “Considering the fact that a concrete transaction structure is not yet in place, the probable impact it would have on our capital and other financial ratios cannot be assessed at this stage.
“Having said that, we would like to assure investors that PFC will make all necessary efforts to maintain its capital adequacy at all times, as per the limits prescribed by RBI.”
On concerns related to potential merger of REC with PFC subsequent to the acquisition, PFC said no decision has been taken yet in this regard.
“Presently, the focus is on completing the acquisition process and further steps will be taken as deemed necessary by PFC in consultation with the Ministry of Power/ government and in compliance with applicable law,” it said.
The company also informed that as per its understanding, the government wants to conclude this transaction by March 31, 2019.
On December 20, PFC’s board gave in-principle approval to the acquisition of REC, it said.
The proposed acquisition got Cabinet nod earlier this month. As per the proposal, PFC will buy government’s entire 52.63 per cent stake in REC along with taking over the management control.
On PFC being placed on credit watch by rating agencies, it said it is a regular process and principal reason to place PFC on credit watch is the uncertainty at the moment around the pricing and financing structure/plan for the deal, and its impact on financial parameters of PFC.
Source: Business-Standard