Re­liance Group boards rec­om­mend le­gal ac­tion over m-cap ero­sion

Business Standard - - FRONT PAGE - PRESS TRUST OF IN­DIA

A day af­ter ac­cus­ing L&T and Edel­weiss en­ti­ties of caus­ing huge mar­ket value ero­sion by “il­le­gal and mo­ti­vated” sale of their pledged shares, Anil Am­bani-led Re­liance Group said boards of its three listed firms had rec­om­mended “all ap­pro­pri­ate le­gal steps” to pro­tect share­hold­ers’ value.

In sep­a­rate reg­u­la­tory fil­ings, Re­liance Cap­i­tal, Re­liance In­fras­truc­ture, and Re­liance Power said their re­spec­tive boards met on Satur­day to re­view the events of last week that led to a sharp fall in their mar­ket cap­i­tal­i­sa­tion and de­struc­tion of wealth.

L&T Fi­nance and Edel­weiss Group have re­futed the al­le­ga­tions and counter ac­cused Re­liance Group of fail­ing to make timely pay­ments, which they said ne­ces­si­tated sale of pledged shares.

In its fil­ing, Re­liance Cap­i­tal said its over 700,000 share­hold­ers had been im­pacted by “il­le­gal, mo­ti­vated and un­war­ranted ac­tions of L&T Fi­nance”. The fi­nan­cial ser­vices arm of Re­liance Group said its board had rec­om­mended and ap­proved that the com­pany take all ap­pro­pri­ate le­gal steps to pro­tect and en­hance the value of all its stake­hold­ers, es­pe­cially re­tail share­hold­ers.

Re­liance Power separately said its board re­viewed the events lead­ing to a sharp fall in mar­ket cap­i­tal­i­sa­tion and de­struc­tion of wealth due to “il­le­gal, mo­ti­vated and un­war­ranted ac­tions of L&T Fi­nance and Edel­weiss Group, im­pact­ing its over 31.75 lakh share­hold­ers”. Its board also rec­om­mended and ap­proved “all ap­pro­pri­ate le­gal steps to pro­tect and en­hance the value of all its stake­hold­ers”.

Re­liance In­fras­truc­ture blamed L&T Fi­nance for mar­ket value ero­sion, say­ing it had im­pacted its over 800,000 share­hold­ers and said its board had, there­fore, rec­om­mended and ap­proved all ap­pro­pri­ate le­gal steps.

In its state­ment on Fri­day, Re­liance Group had al­leged that some NBFCs, “sub­stan­tially L&T Fi­nance and cer­tain en­ti­ties of Edel­weiss Group, have in­voked pledge of listed shares of Re­liance Group and made open mar­ket sales of the value of ap­prox­i­mately ~400 crore dur­ing Fe­bru­ary 4-7”. “The il­le­gal, mo­ti­vated and wholly un­jus­ti­fied ac­tion by the above two groups has pre­cip­i­tated a fall of ~13,000 crore, an un­prece­dented nearly 55 per cent, in mar­ket cap­i­tal­i­sa­tion of Re­liance Group over just these four short days,” it had said.

Re­fut­ing the al­le­ga­tions, L&T Fi­nance said it had granted loans against pledge of shares to Re­liance ADAG Group com­pa­nies. “Ac­cord­ing to the loan and pledge agree­ments, the bor­rower did not cure var­i­ous events of de­faults in­clud­ing pro­vid­ing mar­gin for short­fall in the stip­u­lated se­cu­rity cover. De­spite var­i­ous no­tices in the past few months, events of de­faults con­tin­ued. Con­se­quently, L&T Fi­nance en­forced its rights of in­vo­ca­tion and sold pledged shares to the ex­tent of its out­stand­ing dues by fol­low­ing the due process of con­tract and law," it said in a state­ment.

While not­ing that the al­le­ga­tions as "un­founded, base­less and false", Edel­weiss Group said it had granted credit fa­cil­i­ties against pledge of shares to Re­liance ADAG Group.

Anil Am­bani-pro­moted firms have blamed L&T Fi­nance, Edel­weiss for a sud­den slump in their stock prices

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