Reliance Industries' Rs 53,125-cr right issue to open May 20, close on June 3

Oil-to-telecom conglomerate Reliance Industries Ltd on Saturday said its mega Rs 53,125 crore rights issue will open for subscription of shareholders on May 20 and close on June 3. Billionaire Mukesh Ambani's firm had on April 30 anunced fund raising of Rs 53,125 crore by way of a 1:15 rights issue - India's biggest and first such issue by firm in nearly three decades.

Reliance had earlier fixed May 14 as record date for determining shareholders' eligible to apply for issue. In a regulatory filing, company said rights issue committee of board of directors at its meet on May 15 approved issue opening on May 20 and closing date of June 3.

"Abridged letter of offer, application form of rights issue, and rights entitlement letter, to be sent to eligible equity shareholders of company," it said.

One share will be offered for every 15 shares held at Rs 1,257, a 14 per cent discount to closing price for April 30. Reliance share price has since risen to Rs 1,458.90 (Friday's closing price) but rights issue price remains same. proposed rights issuance will be first by Reliance in three decades. Typically, cash-strapped companies use rights issues to raise money when y really need it. In se rights offerings, companies grant shareholders right, but t obligation, to buy new shares at a discount to current trading price.

But for Reliance, it is t about raising funds as it has significant liquidity with USD 23.4 billion of cash and equivalent. It is being seen as an attempt to reward shareholders, cut debt at group and underscore promoters' faith in Reliance growth story. Promoter Ambani family has under-written entire rights issue, pledging to buy shares that are unsubscribed.

last time Reliance tapped public for funds was in 1991 when it had issued convertible debentures. 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 plan, RIL has been seeking strategic partnerships across its businesses while targeting to delever balance sheet. At end of March quarter, RIL had an outstanding debt of Rs 3,36,294 crore. It also had cash in hand of Rs 1,75,259 crore, bringing net debt position to Rs 1,61,035 crore.

As part of its balance sheet deleveraging plans, Reliance has sold mirity stake in its digital unit Jio Platforms to likes of Facebook. It is also talking to Saudi Aramco for selling a fifth of its oil-to-chemicals business for an asking of USD 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. Toger, proceeds from se transactions will result in reduction in RIL's net debt.