Mukesh Ambani offers Reliance Industries shareholders 1 new share for every 15 held— at a price 14% below market value
- The refining to telecom to retail conglomerate has announced its rights issue plan.
- The shares will be issued at a ration of 1:15 at ₹1,257.
- This is 14% below Thursday’s closing price in the market.
Analysts expected RIL to announce 1 share for every 20 held and that would have diluted the value of existing shares by 5%. However, now that people will get 1 for every 15, the erosion of value of the existing shares will be more than 5%.
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. The money will go into reducing debt. At the end of March 2020, RIL had an outstanding debt of ₹3.36 lakh crore ($44.4 billion).
This is not the only move that Ambani has undertaken to reduce debt. Just last week, RIL agreed to sell 9.99% stake in its digital platform, Reliance Jio, to Facebook Inc for $5.7 billion or ₹43,574 crore.
Ambani had in August last year unveiled plans to cut debt to zero by 2021. The other key requirement for Ambani to repay RIL’s massive debt is to sell stake to Saudi Arabia’s refining giant Aramco. There has been speculation that the deal to sell 20% stake in the oil-to-chemicals unit for $15 billion may be derailed because of the crash in crude oil prices, which may hurt Aramco’s ability to cough up such huge sums of money.
However, RIL reassured its investors that the due diligence on part of Aramco is progressing as per schedule.
Reliance Retail’s operating profit grows nearly 20% in the latest fourth quarter
Tech Mahindra’s net profits see a massive 32% drop even as its digital business is treading water amidst the COVID-19 crisis
HUL fourth-quarter volume growth down 7%, profit falls 1%, India sales slide 9% — as COVID-19 strikes India’s largest consumer firm
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