Anil Ambani group to invest Rs 1052 cr in RNRL

Reliance-Anil Dhirubhai Ambani Group (R-ADAG) has decided to invest up to Rs 1,052 crore (Rs 10.52 billion) in its gas-based resource undertaking Reliance Natural Resources Ltd (RNRL) through subscription of preferential shares.

The RNRL board today approved the decision to allot preferential shares to the promoters at a minimum price of Rs 25.65, the average  market price of the stock for the preceding two weeks. The offer price represents a premium of over 400 per cent to the face value of Rs 5 per share of RNRL. Long-term financial investors might participate in the preferential offer as well.

Post-offer, the promoters' stake will increase to 55 per cent from the current 40.54 per cent. RNRL's net worth will increase 175 per cent from the current Rs 608 crore (Rs 6.08 billion) to Rs 1,660 crore (Rs 16.60 billion), on completion of the preferential offer. At present, the company is debt-free.

Its equity share capital will go up to Rs 816.56 crore (Rs 8.165 billion), reflecting a market capitalisation of Rs 6,181 crore (Rs 61.81 billion), based on the closing price on March 14

After the preferential issue, the promoters will come out with a mandatory 20 per cent open offer, in accordance with the Sebi takeover code. The offer for 32.66 crore (Rs 326.6 million) equity shares, representing a 20 per cent stake of the expanded share capital, will open on May 3 and close on May 22, 2006.

The offer, in case of full subscription, will cost the promoters Rs 838 crore (Rs 8.38 billion).

In a media statement, RNRL said the move showed commitment of the promoters to the company despite the uncertainties surrounding the gas supply with Reliance Industries. RNRL's shares were distributed free of cost to over 2 million Reliance shareholders as part of the settlement of the Ambani brothers.

Post the offer, retail investors will hold a 19 per cent stake in the company. FIIs will hold 16 per cent stake while GDR holders will have 4 per cent stake. Domestic financial institutions will have 6 per cent stake.

Meanwhile, Reliance Communications Ventures, the operating company of the telecom business of the R-ADAG, will meet on March 21 to consider issue of foreign currency convertible bonds.

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