Energy to Telecom major reliance industries Limited (RIL), the country’s largest company in terms of market capitalisation, is all set to go live with its mega rights issue on Wednesday. The rights issue valued at Rs 53,125 crore, will be open for subscription today and it will close on june 3. This is the biggest ever rights issue announced by a company in india and the first time in almost three decades that RIL plans to raise funds from the shareholders, including promoters of the company.
The rights issue is part of RIL boss mukesh Ambani’s plan to deleverage the company’s balance sheet and make it net debt-free by march 2021. (Photo: Reuters). The company is actively taking other measures to pare its debt as well. But the rights issue is a key milestone for the company in its effort to become a zero net debt company. Here are some key points you should know about the mega rights issue.
When a company is planning to cut down on its debts and needs to raise money, they often announce rights issues. In case of a rights issue, a publicly listed company offers its existing shareholders the option not an obligation to buy new shares at a discount compared to the current trading price. In a nutshell, it is an invitation to existing shareholders to purchase additional new shares of the company, which is looking to raise additional capital from its shareholders. The company had informed its shareholders in an earlier letter that it plans to raise over Rs 53,000 crore through the fresh rights issue, a bulk of which will be used to clear the company's debts. It may be noted that the company will issue 42,26,26,894 equity shares as part of the mega rights issue. The company will offer existing shareholders one new share for 15 held at a discounted price of Rs 1,257.
