RIL rights issue oversubscribed nearly 1.3 times with one day still to go

Ltd’s Rs 53,124 crore rights issue, which has already been oversubscribed, on Tuesday received further bids for 88 million shares, taking the subscription to nearly 130 per cent, according to stock exchange data.

The issue subscription data on stock exchanges showed total bids received at 549 million, overshooting the 422.6 million shares on offer by 29.8 per cent.

The received applications for 485 million rights shares, NSE for 56.4 million and the non-ASBA bid quantity stood at 7 million rights shares.

As per Dealogic, the rights issue is the world’s largest by any non-financial company in last 10 years. It opened for the subscription of shareholders on May 20 and will close on June 3, 2020.

Billionaire and promoter group had pledged to subscribe to the full extent of their rights entitlements and any unsubscribed portion of the issue.

In the rights issue, the company is offering one share for every 15 shares held at Rs 1,257.

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RIL on closed at Rs 1536.10 on Tuesday.

The company, as per the issue offer document, will use three-fourth of the proceeds of its mega rights issue for repayment of some of its borrowings.

The company expects net proceeds of Rs 53,036.13 crore from the issue after accounting for legal and other expenses.

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 had previously said.

The last time RIL tapped the public for funds was in 1,991 when it had issued convertible debentures. The debentures were subsequently converted into equity shares at Rs 55 a piece.

Ambani had in August last year unveiled plans to cut debt to zero by 2021.

As part of this plan, RIL has been seeking strategic partnerships across its businesses, while targeting to deleverage the balance sheet.

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At the end of March quarter, RIL had an outstanding debt of Rs 3.36 trillion. It also had cash in hand of Rs 1.75 trillion, bringing the net debt position to Rs 1.61 trillion.

As part of its balance sheet deleveraging plans, Reliance has sold a minority stake in its digital unit, Jio Platforms to the likes of Facebook and private equity firms.

It is also talking to Saudi Aramco for selling a fifth of its oil-to-chemicals business for an asking of $15 billion and has sold half of its fuel retail venture to BP Plc for Rs 7,000 crore and telecommunication tower business to Brookfield for Rs 25,200 crore.Together, proceeds from these transactions will result in a reduction in RIL’s net debt.