New Delhi, June 29: The Boards of Directors of Power Finance Corporation Limited (PFC) and REC Limited have approved a scheme for the merger of REC into PFC, paving the way for the creation of a financing entity with an aggregate loan book of over ₹11 lakh crore.
In a statement, the companies said the merger has been approved under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, subject to statutory approvals and fulfilment of prescribed conditions.
The statement said the proposed merger remains subject to approvals from the shareholders and creditors of both companies, as well as the concerned regulatory and government authorities. It also requires the merged entity to continue as a Government Company under the Companies Act, 2013, with the Government of India retaining majority voting rights and control, directly or indirectly.
According to the approved scheme and valuation report, REC shareholders will receive 88 equity shares of PFC of ₹10 each for every 100 equity shares of REC of ₹10 each held on the record date, which will be determined by the Boards of both companies at a later stage.
The statement further said Deloitte Touche Tohmatsu India LLP has been appointed as the transaction and tax advisor, while Cyril Amarchand Mangaldas is serving as the legal advisor for both companies.
RBSA Valuation Advisors LLP and Ernst & Young Merchant Banking Services LLP were appointed by PFC and REC, respectively, to prepare the joint valuation report. SBI Capital Markets and Nuvama Wealth Management have provided fairness opinions on the valuation report for PFC and REC, respectively.
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