Reliance shares fall after Ambani seeks stock at below-market price

Reliance shares fall after Ambani seeks stock at below-market price
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First Published: Tue, Feb 27 2007. 10 17 AM IST
Updated: Tue, Feb 27 2007. 10 17 AM IST
Agencies
New Delhi: Shares of Reliance Industries Ltd, India’s most valuable company, fell after Chairman Mukesh Ambani and his associates sought stock at below-market prices.
The stock fell as much as Rs17.05, or 1.2%, to Rs1,390.15 on the Bombay Stock Exchange. Ambani’s group, which now has 50.62% of the company, aims to secure the right to buy shares at Rs1,402 apiece in 18 months, according to an e-mail from Reliance yesterday.
Reliance shares had gained 97% since Mukesh Ambani got Reliance Industries as part of a settlement to resolve a family dispute with his brother Anil. Securing the right to buy the stock at a price little changed from the current level in 18 months shows Ambani doesn’t expect a gain, investor R.K. Gupta said.
“This shows the management thinks the company’s current stock price is correct,” said Gupta, who manages $70 million (Rs75.1 crore) at Credit Capital Asset Management in New Delhi. “This disappointed the market, which was expecting the share to rise.”
The company’s board on 24 February approved the issue of 120 million warrants convertible into shares within 18 months. The group would pay Rs168.24 billion to raise their stake.
The exercising of the preferential warrants will boost Reliance’s share capital by 8.6%.
The price offered is the average of the weekly high and low of closing prices on the National Stock Exchange in the past two weeks, the statement said. The principal owners will pay 10% of the price on allotment of the warrants and the remainder when exercising the option to convert into shares.
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First Published: Tue, Feb 27 2007. 10 17 AM IST
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