Mumbai: Reliance Industries Limited(RIL) has fixed the issue price of warrents at Rs1,402, which is the average of the weekly high and low of the closing prices of the company’s equity shares quoted on the National Stock Exchange for last two weeks. The company proposes to issue 12 crore preferential warrants to its promoter Mukesh Ambani and his associates. RIL will seek the shareholders’ consent to this proposal through a postal ballot. The last date for receipt of the postal ballot from the shareholders is 29 March.
The company is expected to announce the results of the resolution being passed through postal ballot on 30 March. RIL is planning to raise about $3 billion (Rs13,200 crore) thorugh this preferential warrents, which can be converted into equity in 18 months from the issue date, to fund its proposed projects such as oil and gas exploration, distribution infrastructure and orgainsed retail. RIL is also planning to raise another $2 billion through external commercial borrowings (ECB) to fund these projects announced last year.
Meanwhile, shares of RIL fell on concern that it will sell stock to help fund more than $13 billion (Rs57,200 crore) of investments. The stock dropped 0.4% to Rs1,407.2 at the close on the Bombay Stock Exchange, after falling 2.8% earlier. Reliance had said on Saturday that chairman Mukesh Ambani and his associates will buy warrants convertible into shares, prompting speculation that he plans to maintain a majority stake in the event of a possible share sale.
The company plans to build a $3 billion chemical plant near its refinery in western India. Reliance Petroleum
“They may decide to raise funds for all these new investments, either by selling shares or through convertible bonds,” R.K. Gupta, who manages $70 million of assets at Credit Capital Asset Management, said.
“The main owners of the company have ensured that their stake won’t fall below 50% in case there’s a share sale.” Credit Capital owns 30,000 shares in Reliance Industries.
Ambani and his associates, who now own 50.62%, will buy 120 million warrants convertible into an equal number of shares, the company said on Saturday. That would boost the share capital by 8.6%.
The statement didn’t give the price at which the warrants will be converted into shares. The sale is to be approved by shareholders.
Reliance hasn’t announced any plans to sell shares to raise funds.
Manash Goswami and Ravil Shirodkar of Bloomberg contributed to this story