In a major development for Reliance Industries, its shareholders and creditors gave their nod to the proposed scheme of arrangement hiving off its oil-to-chemical (O2C) business into a separate unit, Mukesh Ambani led-firm said on Friday.
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.
The Scheme provides for transfer of the O2C Undertaking from the Transferor Company to the Transferee Company on a slump sale basis for a lumpsum consideration and reduction of capital of the Transferor Company consequent to adjustment of capital reserve and securities premium against the debit to the statement of profit and loss arising on transfer of the O2C Undertaking.
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. 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.
“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.
The Chairperson thereafter addressed the Equity Shareholders. He informed that the remote e-voting commenced at 9 a.m. on Friday, March 26 and concluded at 5 p.m. (IST) on Tuesday, March 30. These votes were cast via Shareholders and lenders.
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.
This move of carving 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 USD 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.