New Delhi, Feb 24 :
Billionaire Mukesh Ambani’s Reliance Industries announced the contours of spinning-off its oil refining, fuel marketing and petrochemical (oil-to-chemical) business into an independent unit with a USD 25 billion loan from the parent, as it looks to unlock value by settling stakes to global investors like Saudi Aramco.
The carving out of 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 filed with the stock exchanges.
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 textiles 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.
