Reliance Infrastructure Board Approves Sale Of Mumbai Power Business To Adani

Reliance Infrastructure Ltd., which recently defaulted on debenture payments, approved sale of its power business in Mumbai to Adani Transmission Ltd. as the Anil Ambani-led firm looks to repay debt.

The deal—worth Rs 18,800 crore—was approved by the company’s board at a meeting today, it said in a stock exchange filing. “It is the largest ever debt-reduction in the infrastructure sector,” Ambani, chairman of the company, said at a media conference. “It is also the largest transaction in the power sector.”

Reliance Infrastructure had earlier said that it has obtained all relevant approvals from fair-trade regulator Competition Commission of India, shareholders of the company, Maharashtra Electricity Regulatory Commission, and others. “It was completed in a record time from the date of announcement to conclusion in just over eight months considering the regulatory approvals and approvals from 73 different lenders,” Ambani said.

The deal comes as a breather for the younger Ambani as his firm had defaulted on principal and interest payments on non-convertible debentures due on July 27. Its failure to meet obligations prompted rating agencies, including Brickworks Ratings, Crisil Ratings and India Ratings & Research Ltd., to downgrade it to default. All the proceeds from today’s sale will go towards fulfilling its debt obligations.

Reliance Infrastructure’s debt will come down to Rs 7,500 crore from Rs 22,000 crore after the deal’s completion, Ambani said. “This represents a steep debt reduction of 65 percent in just a single transaction.”

To be sure, the core business of the construction and engineering firm has improved with its order book growing to Rs 36,660 crore as of June from Rs 5,960 crore in March last year. Yet, loans to group companies and associates remained high at around Rs 13,558 crore as on March 31, CARE Ratings said.

Reliance Infrastructure, in an earlier emailed response to BloombergQuint, had said the capex cycle of group subsidiaries and associates is complete and they won’t require further infusion.

Ambani added that the firm expects to be a zero-debt company next year. It will also aim to be a “top-credit rated” company by the same time, he said.

Shares of Reliance Infrastructure Ltd. closed 3.75 percent higher in anticipation of today’s announcement that came after the close of trading.

Watch Anil Ambani’s press conference here