Looks like it is going to a bumper new Samvat for Reliance Industries. During Muhurat trading on Sunday, the stock price hit a new life time hig at Rs.1445.75 and today too, it went on to hit another new high at Rs.1471.
On Friday, the company announced creation of wholly-owned digital subsidiary, which in turn paves way for a stake sale in Reliance Jio, either through an IPO or by bringing in a strategic investor.
The company announced a rejig plan wherein the aim is to deleverage RJIL to ensure adequate financial strength for further expansion of Digital Ecosystem. The plan is to transfer liabilities of up to Rs 108,000 crore to RIL and RIL’s total equity investment will be at Rs 173,000 crore through the proposed Wholly owned subsidiary (WOS) with a capital of Rs 5,000 crore equity. The debt reduction will be done through a NCLT approved Scheme of Arrangement.
This will significantly strengthen the balance sheet of WOS and Reliance Jio and consequently reduce interest cost. RIL has specified that this will have no impact at consolidated level for Reliance Industries Limited.
There is also a Rights issue by Reliance Jio of Optionally Convertible Preference Shares (‘OCPS’) aggregating to Rs 1,08,000 crore to WOS through sale of 4,500 crore equity shares and 20,000 crore OCPS. The proceeds of the Rights Issue will be used for payment of consideration for transfer of liabilities. The OCPS to convert into shares based on fair valuation and there will also be issuance of OCPS by WOS to RIL.