PFC, REC seek to help centre retain majority at low cost

The boards of PFC and REC will meet on Sunday to discuss their proposed merger, with the government exploring two options to retain a majority stake of over 51% in the merged entity. The preferred route involves issuing about 800 million preference shares to the government at a face value of Rs 10 per share, entailing a one-time cash outflow of around Rs 800 crore. The alternative option of recapitalisation bonds of nearly Rs 24,000 crore would cost about Rs 1,400 crore annually at a 7% coupon rate, making it the more expensive route.