Reliance to use three-fourths of its rights issue to repay debt

RIL expects net proceeds of Rs 53,036.13 cr from the rights issue that opens on May 20 and closes on June 3. Of these, Rs 39,755.08 cr would go towards “repayment/ prepayment of all or a portion of certain borrowings availed by company,” it said.

The balance Rs 13,281.05 crore would be used for general corporate purposes. Shareholders will have to pay only 25 per cent for subscribing to the company’s mega Rs 53,125-crore rights issue, and the balance will have to be paid in two installments in May and November next year, the company said.

One share will be offered for every 15 shares held at Rs 1,257. Of the Rs 1,257 per share price, only 25 per cent is to be paid at the time of subscription. A similar amount will be due for payment in May 2021 and the balance 50 per cent has to be paid in November 2021, the company said.

“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 last date for shareholders wishing to do an on market renunciation is May 29.

Out of the net proceeds of Rs 53,036.13 crore, three-fourth will be used to repay/repay either fully or partly the Rs 16,350 crore of commercial papers and Rs 36,213 crore of non-convertible debentures, the offer document said.

Billionaire Mukesh Ambani’s firm had on April 30 announced fund raising of Rs 53,125 crore by way of a 1:15 rights issue - India’s biggest and first such issue by the firm in nearly three decades.

One share will be offered for every 15 shares held at Rs 1,257. Reliance Industries’ shares closed at Rs 1,408 on the BSE.

The last time RIL tapped the public for funds was in 1991 when it had issued convertible debentures. The debentures were subsequently converted into equity shares at Rs 55 apiece.

Ambani had in August last year unveiled plans to cut debt to zero by 2021. As part of this, RIL has been seeking strategic partnerships across its businesses, while targeting to deleverage the balance sheet. At the end of March quarter, RIL’s outstanding debt was Rs 3,36,294 crore. It also had cash in hand of Rs 1,75,259 crore, bringing the net debt position to Rs 1,61,035 crore.