Mumbai: Reliance Industries Ltd (RIL) will raise promoters' stake in the country's largest private firm through a preferential offer. The board of directors of RIL has approved a proposal to issue 12 crore warrants of Rs10 each to the promoters, including Mukesh Ambani.
Post preferential issue, the promoters' share in Reliance Industries is expected to go up by five per cent from the current 50.62 per cent.
RIL would also raise $2 billion in debt through external commercial borrowings for funding its oil and gas business, the company said in a press release.
Besides, RIL will invest $3 billion in a two million tonne naphtha cracker project in Jamnagar, as part of the petrochemical complex. The company had earlier planned to raise $2 billion (Rs9,000 crore) to finance capital expenditure in oil and gas exploration, which has now been revised. The cracker will be operational by 2010-11.
Sources connected with the developments said the Mukesh Ambani-led promoter companies would increase their holdings by the maximum permissible limit of five per cent in tranches.
To raise their stake by five per cent, the promoters of RIL would have to subscribe to around 150 million preferential shares. SEBI norms also require preferential issues to be priced at or over the last six months' average stock price.
At the last six months' average price of Rs1,250 for an RIL share, a five per cent increase in his stake would cost Mukesh Ambani Rs19,000 crore.
"An amount equivalent to 10 per cent of the price would be paid on allotment of the warrants, and the remaining 90 per cent would be paid at the time of subscription to equity shares on exercise of rights attached to the warrants within a period of 18 months," a release issued by the company said.
The 12 crore preferential issue will increase the paid-up capital of the company from Rs1,393 crore to Rs1,513 crore.
RIL promoters have been raising their stake in the group's businesses after the split between Mukesh and his brother Anil in June 2005. Their stake has gone up by four per cent since then.