Mumbai: To cash in on cheap funds flooding the debt market through the targeted long-term repo operations route, Reliance Industries (RIL) will raise Rs 9,000 crore through an NCD sale to refinance the existing high-cost rupee debt.
The most cash-rich company is also one of the most indebted corporates sitting on debt pile of over Rs 1.54 lakh crore as of March 2020.
According to an exchange filing, RIL is launching a Rs 9,000-crore non-convertible debenture (NCD) issue on April 16 and the proceeds from the debt sale will be used to repay existing rupee debt.
The issue has two components: a Rs 4,500-crore fixed rate tranche and an equal tranche with floating rate and both the issues are offering a coupon of 7.20 per cent-4.40 per cent of repo with a spread of 2.80 per cent.
The NCDs will be issued through a private placement, which will consist of 30,000 unsecured redeemable fixed coupon, non-convertible debentures under the privately placed debentures (PPD) series K1.
Each NCD has a face value of Rs 10 lakh each aggregating to Rs 3,000 crore along with a greenshoe option for oversubscription up to Rs 1,500 crore, aggregating in cash to Rs 4,500 crore.
In the floating interest rate tranche, RIL will issue 35,000 unsecured redeemable, non-convertible debentures under the PPD Series K2 each having a face value of Rs 10 lakh, aggregating in cash to Rs 3,500 crore with an option to retain oversubscription up to Rs 1,000 crore aggregating to Rs 4,500 crore.
If it raises the targeted Rs 9,000 crore, this is nearly a tenth of the Rs 1 lakh crore liquidity RBI has promised to pump into the debt market through the targeted long term repo operations (TLTRO). Of the total amount it has already infused Rs 75,000 crore into the system.
For the quarter to December 2019, RIL's consolidated turnover stood at Rs 1,68,858 crore and net profit at Rs 11,640 crore.