State-owned Power Finance Corporation (PFC) concluded the acquisition of Rural Electrification Corporation (REC) by paying Rs 14,500 crore to the Central government. PFC has acquired 52.63 per cent equity stake of the Centre in REC along with management control. The deal was approved by the Cabinet Committee for Economic Affairs (CCEA) in December 2018.
PFC has financed the deal with internal accruals and by raising term loans. “Around 70 per cent of the payment made is through the cash inflows from the business and the balance 30 per cent is through debt,” Rajiv Sharma, CMD, PFC said.
PFC borrowed around Rs 88,000 crore at competitive rates during the current fiscal. Out of this, 50 per cent borrowing has been through term loans availed from banks, mostly at MCLR rates, Sharma said. This includes Rs 5,500 crore term loans for maintaining its tier-II capital post the acquisition.
