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Regular-article-logo Sunday, 23 June 2024

Rights funds to trim RIL debt

The oil-to-telecom giant expects its net proceeds from the issue at Rs 53,036.13 crore

Our Special Correspondent Mumbai Published 19.05.20, 07:59 PM
The offer document said Rs 39,755.08 crore would go towards “repayment/prepayment of all or a portion of certain borrowings availed by the company”. The remaining Rs 13,281.05 crore would be used for “general corporate purposes”.

The offer document said Rs 39,755.08 crore would go towards “repayment/prepayment of all or a portion of certain borrowings availed by the company”. The remaining Rs 13,281.05 crore would be used for “general corporate purposes”. (Shutterstock)

Reliance Industries (RIL) will use almost 75 per cent of the proceeds of its rights issue for the repayment of some of its borrowings, according to the offer document.

The oil-to-telecom giant expects its net proceeds from the rights issue at Rs 53,036.13 crore. The issue will open on May 20 and close on June 3.

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The offer document said Rs 39,755.08 crore would go towards “repayment/prepayment of all or a portion of certain borrowings availed by the company”. The remaining Rs 13,281.05 crore would be used for “general corporate purposes”.

RIL disclosed that it proposes to repay either fully or partly borrowings from commercial papers to the tune of Rs 16,350 crore or non-convertible debentures, of which Rs 36,213 crore was outstanding as of March 31, 2020.

Shareholders will have to pay only 25 per cent for subscribing to the mega rights issue, and the balance will have to be paid in two instalments in May and November next year, the company said. One share will be offered for every 15 shares held. The offer price is Rs 1,257 per share.

“On application, investors will have to pay Rs 314.25 per rights equity share, which constitutes 25 per cent of the issue price and the balance Rs 942.75 per rights equity share which constitutes 75 per cent of the issue price, will have to be paid, on one or more subsequent call(s),” it said.

In May 2021, they will have to pay Rs 314.25, and balance Rs 628.50 is to be paid in November 2021. The offer document added that Reliance’s promoter and promoter group, by way of their letters dated May 15, have confirmed to subscribe to the full extent of their rights entitlements and any unsubscribed portion of the issue.

First in 30 years

Last month, RIL had announced the rights issue which was the first share offering by the firm in nearly three decades. The offer is expected to help RIL achieve its goal of being a zero net debt firm by March 2021. However, with RIL clinching four deals in its digital services platform, it may achieve that target sooner.

Optimism in this regard has also risen after RIL said that a proposed transaction with Saudi Aramco in its oil to chemical business is also on track.

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