New Delhi: Billionaire Mukesh Ambani’s Reliance Industries Ltd on Friday said it has secured approval of its shareholders and creditors for hiving off its oil-to-chemical (O2C) business into a separate unit. As per directions of the National Company Law Tribunal (NCLT), the company convened meetings of equity shareholders, lenders and unsecured creditors for consideration of a resolution for transferring the O2C business to a separate subsidiary – Reliance O2C Limited.
In stock exchange filings, RIL said 99.99 per cent of shareholders, who participated in the meeting held through video conferencing, voted in favour of the resolution. While 100 per cent of the secured creditors voted in favour of the resolution, 99.99 per cent of unsecured creditors cast their vote in favour of the resolution. The meetings were chaired by former Supreme Court judge Justice (Retd) BN Srikrishna.
“Scheme of Arrangement between Reliance Industries Limited (Transferor Company) and its shareholders and creditors and Reliance O2C Limited (Transferee Company) and its shareholders and creditors was placed before” equity shareholders, secured and unsecured creditors for consideration and approval, the filings said. Shareholders and lenders cast votes electronically.
In February, RIL had announced the contours of spinning-off its oil refining, fuel marketing and petrochemical (oil-to-chemical) business into an independent unit with a $25 billion loan from the parent, as it looked to unlock value by settling stakes to global investors like Saudi Aramco. The carving out of Reliance O2C Limited (O2C) will enable the focused pursuit of opportunities across the oil-to-chemicals value chain, improve efficiencies through self-sustaining capital structure and a dedicated management team, and attract dedicated pools of investor capital, according to a company presentation.
The transfer of twin refineries at Jamnagar in Gujarat, petrochemical sites in multiple states, and a 51 per cent stake in the fuel retailing business to O2C will be on a ‘slump sale basis’, subject to requisite approvals that are expected to come in by September. However, upstream oil and gas producing fields such as KG-D6 and the textile business will not form part of the new unit, where it aims to maintain a significant majority stake.
The consideration for the transfer will be in the form of long-term interest-bearing debt of $25 billion to be issued by O2C to Reliance Industries Ltd (RIL). RIL’s external debt is proposed to remain with RIL only. Once completed, RIL — the company founded by Dhirubhai Ambani in the late 1960s — will house only the upstream oil and gas exploration and production business, financial services, group treasury and legacy textile businesses, and act as a holding company of the group.
The retail business is held in Reliance Retail Ventures Ltd and telecom and digital ventures are nested in Jio Platforms Ltd. Long-dated loans issued by O2C to RIL, as part of the reorganisation, will provide an efficient mechanism to upstream cash generated from O2C to RIL, the presentation said. RIL has been in ongoing discussions with Saudi Arabian Oil Company (Saudi Aramco) to sell a minority 20 per cent stake in its O2C businesses, which, if successful, should lead to further deleveraging of the company.
Reliance extends deadline to complete Future deal
Reliance Retail Ventures, the retail arm of Reliance Industries, has extended the timeline for six months to complete its Rs 24,713 crore deal with Kishore Biyani-led future group to buy its retail and wholesale business. Reliance Retail Ventures Ltd (RRVL) has extended the timeline for the “Long Stop Date” from March 31, 2021 to September 30, 2021, said a regulatory filing by Future Retail.
“Pursuant to the provisions of scheme and other transaction documents executed in relation thereto, RRVL has in exercise of the right provided thereunder, extended the timeline for ‘Long Stop Date’ from March 31, 2021 to September 30, 2021 which has been duly acknowledged by Reliance Retail and Fashion Lifestyle Limited, wholly-owned subsidiary of RRVL,” it said. Long Stop, an established practice in mergers and acquisition transaction, is a timeframe in which parties agree on which all the conditions precedent for a transaction need to be fulfilled and the transaction completed.
The deal, which is contested by Amazon, is facing legal hurdles and a decision from the Supreme Court is pending over the petition filed by the e-commerce major. The Future-Reliance deal, which was announced on August 29, 2020, has already received clearance from regulators such as CCI, SEBI and bourses, and the scheme of arrangement is now awaiting the nod from the NCLT and shareholders.
Though the Supreme Court has granted a go-ahead to the National Company Law Tribunal (NCLT) for its proceedings but has asked it not to pass any final order sanctioning the scheme. The NCLT has reserved its order over the scheme of arrangement in which all the Future Group’s retail assets would be consolidated under Future Enterprises Ltd and then would be transferred to RRVL through sale.
Last month, a Single Member Bench of the Delhi High Court had directed the Future Group to stay the deal. However, this was challenged by the Future Group before the Division Bench of the Delhi High Court, which stayed the order of the Single Member bench. Amazon and Future have been locked in a bitter legal tussle after the US e-commerce giant dragged Future Group to arbitration at Singapore International Arbitration Centre (SIAC), arguing that the latter had violated their contract by entering into the deal with rival Reliance.