The board of Delhi Metro Rail Corporation has approved the raising of the equity share capital of the DMRC by way of the rights issue, to be subscribed equally by both the stakeholders -- the Centre and the Delhi government.
The funds raised will be to meet the liability arising out of an arbitral award of 2017 in favour of Delhi Airport Metro Express Private Ltd (DAMEPL).
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company.
The DMRC is a 50:50 joint venture between the government of India and the Delhi government.
The Supreme Court on Wednesday directed the Delhi High Court to proceed with the execution of the Rs 4,600 crore arbitration award granted in favour of DAMEPL, which had pulled out from running the Airport Express metro line over safety issues and take it to a logical end within three months.
An arbitral tribunal had ruled in favour of Reliance Infra's DAMEPL and accepted its claim that running the operations on the line was not viable due to structural defects in the viaduct through which the train would pass.
The Board of Directors of the DMRC held a meeting on December 13.
The sole agenda was to "consider seeking approval of the Board to request both the stakeholders of Delhi Metro Rail Corporation Ltd., i.e. Union Ministry of Housing and Urban Affairs (MoHUA) and Government of National Capital Territory of Delhi (GNCTD) to subscribe to the equity share capital of the DMRC Ltd. to meet the liability arising out of Arbitral Award dated 11.05.2017, in favour of Delhi Airport Metro Express Private Ltd," the DMRC has said in its affidavit in the court.
The Board "approved the sole agenda of raising equity share capital as stated aforesaid, and as per the resolution passed by the Board, the subscription of the issue is slated to be opened for subscription on 15.12.2022 and would close on 11.01.2023," it added.
In order to make the due payment to DAMEPL, there is an urgent need to infuse funds by raising equity share capital to the tune of Rs 7131.28 crore. "Therefore, both the stakeholders i.e. Gol and GNCTD are requested to infuse funds by way of equal equity contribution to the tune of Rs 3,565.64 crore each", reads the agenda notes for the Board meeting.
"The Board discussed the matter and approved raising the paid-up equity share capital of the Company by way of right issue, to be subscribed equally by both the stakeholders i.e. Gol and GNCTD," according to the minutes of the meeting, attached in the affidavit.
The consent of the Board is hereby "accorded to offer and issue 3,56,56,400 equity shares of Rs 1,000 each for cash at par i.e. Rs 1,000 per share aggregating to Rs 3,565.64 crore each to both the stakeholders i.e. Gol and GNCTD on rights basis," it said.
These amount to 7,13,12,800 equity shares of Rs 1,000 each.
This offer carries the right of renunciation, wholly or in part, according to information shared in the affidavit. The DMRC in 2008 entered into a contract with DAMEPL for the design, installation, commissioning, operation and maintenance of the metro line.
However, the matter went into arbitration due to some disputes and the arbitration award was granted in favour of DAMEPL in 2017.
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