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Reliance Industries Ltd.’s oil-to-chemicals business spinoff gets Sebi and stock exchanges approval

Reliance Industries Ltd has received approvals from both Sebi, as well as, stock exchanges to transfer its refining, marketing and petrochemical (oil-to-chemicals) businesses to a wholly-owned subsidiary, called Reliance O2C Limited. While RIL will retain 100 per cent of the O2C subsidiary, its stake in the retail business (Reliance Retail Ventures) will be 85.1 per cent and 67.3 per cent stake in Jio Platforms, it said in an investor presentation.

The transfer will be on a “slump sale basis”, subject to attaining the requisite approvals. The consideration for the transfer will be in the form of long-term interest-bearing debt of $25 billion to be issued by O2C to RIL.

The company now requires the approval of equity shareholders and creditors, regulatory authorities, and the income-tax authority, besides the National Company Law Tribunals (NCLTs) in Mumbai and Ahmedabad. RIL said the approval process is expected to be completed by the second quarter of the 2021-22 financial year. In the presentation to investors, RIL said that the creation of this subsidiary would facilitate value creation through strategic partnerships and attract dedicated pools of investor capital.

RIL has been in ongoing discussions with Saudi Aramco to sell a minority stake in its oil-to-chemicals businesses, which, if successful, should lead to further deleveraging of RIL

RIL’s external debt is proposed to remain with RIL only. As RIL moves its oil refining, petrochemical and 51 per cent stake in a fuel retail subsidiary — among other businesses — to O2C, it will continue to hold businesses like textiles and upstream oil & gas, and will act as an incubator for new growth businesses. The proposed reorganisation eases the formation of strategic partnerships and stake sales to potential investors focussed on management control vestments in oil-to-chemicals businesses. RIL has been in ongoing discussions with Saudi Aramco to sell a minority stake in its oil-to-chemicals businesses, which, if successful, should lead to further deleveraging of RIL.

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