The board of directors of NTPC on Tuesday approved a proposal to issue fully paid-up bonus debentures to its shareholders.

“The board of directors of the company at its meeting held on Tuesday approved a scheme of arrangement for the issuance of secured non-cumulative non-convertible redeemable taxable fully paid-up bonus debentures of face value ₹12.50 each against each equity shares of ₹10 (face value) held by its members,” the company informed the BSE.

These bonus debentures will be issued through a scheme of arrangement under the Companies Act subject to requisite approvals under applicable laws, added the filing.

According to the filing, the company will issue 824.54 crore debentures amounting to around ₹10,306 crore, to a merchant banker, who will park the amount in an escrow account. The debentures will be redeemed in three instalments from the date of allotment — ₹2.50 a debenture at the end of the eighth year, ₹5 a debenture at the end of the ninth year and ₹5 a debenture at the end of the tenth year.

Till such time, the proceeds of the issue of debentures will be utilised for capital expenditure in new and ongoing projects including coal mining projects. Proceeds will also be used for refinancing existing debt and investment in joint ventures as well as subsidiaries, the filing added.