The Board of Directors of Power Finance Corporation Limited (PFC) and REC Limited have approved a Scheme of Merger for the merger of REC (Transferor Company) into PFC (Transferee Company) under Sections 230 to 232 of the Companies Act, 2013. This merger will create a consolidated financing entity with an aggregate loan book exceeding ₹11 lakh crore. The merger is conditional upon receipt of all requisite approvals including from shareholders and creditors of both companies, relevant regulatory and governmental authorities, and requires that the merged entity continues to qualify as a 'Government Company' with the Government of India retaining majority voting rights and control.
The share exchange ratio for the merger has been set at 88 equity shares of PFC (face value ₹10 each) for every 100 equity shares of REC (face value ₹10 each) to be issued to REC shareholders as existing on a record date to be determined later. Several advisors have been appointed for the transaction: Deloitte Touche Tohmatsu India LLP as Transaction and Tax Advisor, Cyril Amarchand Mangaldas as Legal Advisor to both companies, RBSA Valuation Advisors LLP (appointed by PFC) and Ernst & Young Merchant Banking Services LLP (appointed by REC) for joint valuation reports, and SBI Capital Markets (PFC) and Nuvama Wealth Management (REC) for fairness opinions on the valuation reports.