Board of directors to meet on March 5
The board of directors will consider buying back the company’s shares from the market, reports Suman Layak.business Updated: Feb 26, 2008 20:51 IST
The board of directors of the Anil Ambani promoted Reliance Energy Ltd will consider buying back the company’s shares from the market at their meeting on March 5.
This is a move aimed at boosting investor confidence as the stock has suffered during the last month. The listing of Reliance Power, which has been co-promoted by Reliance Energy at a price below its issue price, has also hurt the company’s stock.
According to sources, the company can do a buyback of a maximum of Rs 2,500 crore worth of shares according to guidelines. The cash reserves of the company are in excess of Rs 10,000 crore.
The shares of the company closed at Rs 1,697.25, up 4.59 per cent from its previous close of Rs 1,622.70 as the news of the possible buyback was reported by the media early in the day. The price is still far below the 12-month high that the stock had hit on January 10, 2008, at Rs 2,631.70.
Anil Ambani held a press conference on Reliance Power on February 24 after the board approved a bonus issue for the new shareholders of the company. This was done as the Reliance Power scrip had closed below its issue price on listing day.
In the process, the promoters stake was diluted. Anil Ambani had said to protect the interest of the shareholders of Reliance Energy, the impact of the dilution of the stake in Reliance Power would be borne entirely by his own investment vehicle.