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| RNRL-Reliance Power merger dragged to HC |
| Press Trust of India / Madurai Aug 17, 2010, 20:12 IST |
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 The Madras High Court has asked market regulator Sebi, Reliance Natural Resources (RNRL) and Reliance Power to reply to allegations that the merger between the two Anil Ambani group firms caused investors a loss of over Rs 800 crore.
Issuing notices to the Centre, market regulator Sebi, RNRL and Reliance Power, the Madurai bench of the high court asked them to submit their replies to a petition that alleged the loss was caused by an "arbitrarily" fixed share swap ratio for the merger of the two companies.
The Anil Ambani Group on July 4 had announced the merger between RNRL and another group firm, Reliance Power, in an all-stock deal. The arrangement was that Reliance Power would give one of its shares for every four held in RNRL.
This share swap ratio of 4:1 led to a loss of Rs 813.77 crore for about 25.05 lakh investors, the petition alleged.
Praying for an investigation by a competent authority into the merger and proposed share swap ratio, an investor, A Kesavan, also an advocate, in his petition sought a court direction to the companies to not pursue the merger between them pending disposal of the writ.
The petitioner submitted that on June 25 this year, RIL Chairman Mukesh Ambani and his brother Anil Ambani, the Chairman of RNRL, signed a new Gas Supply Master Agreement, following which RNRL's share price increased by 5 per cent and touched Rs 68.65 per share on the Bombay Stock Exchange.
On expectations that the price would touch Rs 90 per share, on July 2, the petitioner bought 1,000 shares at price of Rs 62.63 a share. RNRL share closed at Rs 63.95, while the closing price of Reliance Power on the same day was Rs 175.30.
The petitioner said the ratio of value of the shares of RNRL and Reliance Power at the time of closing on July 2 was 2.7:1.
RNRL had a higher number of public share holders and it was more liquid than Reliance Power, he added.
He further said that RNRL shareholders were disappointed when the merger was announced in the share swap ratio of 4:1.
He further alleged that it was evident that the Chairman and board members of Reliance Power and RNRL had purposefully acted in a manner to manipulate the share price of RNRL to his expected price and swap ratio of 4:1. This announcement had directly benefitted the Chairman to the tune of Rs 813.77 crore, thereby eroding the wealth of more than 2 million shareholders, the petitioner alleged.
"I myself suffered loss to the tune of Rs 18,450," he said.
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