ADAG offers free bonus shares to Reliance Power investors

New Delhi (PTI): Taking the investing community by surprise, the Anil Ambani group on Sunday announced to consider free bonus shares to all non-promoter shareholders in Reliance Power, while alleging that corporate rivals were pulling down share prices of all group companies.

Reliance Power also demanded a probe by market regulator SEBI into "a vicious and orchestrated campaign of market manipulation and market abuse unleashed by unscrupulous rival corporate interests to hammer down all Reliance ADA stocks".

The company said its board would consider the free bonus shares at a meeting next Sunday, February 24, to benefit over four million of its investors and the cost would be accepted by promoter group by way of diluting its shareholders.

The company said that promoters would accept the dilution in their shareholding in the broader interest of investors.

Besides a proposal for issuing free bonus shares to all categories of shareholders, excluding promoters, the board would also consider other measures that could reduce the cost of Reliance Power Ltd shares below the IPO price of Rs 430 per share for retail investors, and Rs 450 per share for institutional and other categories of investors.

The IPO had closed on January 18, 2008 with an overwhelming response of about Rs 7,50,000 crore in commitments from nearly 500 institutional investors and five million retail investors.

However, subsequent to the closing of the IPO, the global and Indian equity markets have suffered an extra-ordinary meltdown, with all benchmark indices down 15-20 per cent and leading Indian stocks lower by 20-40 per cent, the company said in a statement.

"In line with this global trend, the Reliance Power stock price has closed below the IPO price, since listing on February 11, 2008. From the time of opening of the Reliance Power IPO on January 15, 2008, the Sensex is down 13 per cent, while the Reliance Power stock is down 11 per cent from the IPO price for retail investors, and 15 per cent for other categories of investors," it noted.

The company said that the decline in the Reliance Power stock price has been compounded by an attempt to undermine the group's name and reputation, while causing losses to millions of genuine investors.

"In keeping with the Reliance ADA Group's fundamental and over-riding philosophy of creating value for genuine long term investors, the Board of Directors of Reliance Power will be meeting as above, to consider appropriate one-time measures which will result in reduction of the cost of Reliance Power shares below the IPO price," the company said.

Such measures would include a proposal for issuing free bonus shares, thereby protecting investors even from notional short-term losses on their shareholdings.

Reliance Power said it has the world's largest shareholder family of nearly 500 overseas and domestic institutional investors, and over 4 million retail investors and is implementing power projects with aggregate capacity of over 28,000 MW, by far the largest development pipeline in the country.

Source : http://www.hindu.com/