Reliance obtains shareholder and creditors approval for consolidating O2C activities into separate unit

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Billionaire Mukesh Ambani’s Reliance Industries Ltd said on Friday it had obtained approval from its shareholders and creditors to split its oil-to-chemicals (O2C) business into a separate unit.

Pursuant to instructions from the National Company Law Tribunal (NCLT), the company has called meetings of shareholders, lenders and unsecured creditors to consider a resolution to transfer the O2C business to a separate subsidiary – Reliance O2C Limited.

In the filings, RIL said that 99.99% of shareholders, who attended the meeting held via video conference, voted in favor of the resolution.

While 100% of secured creditors voted in favor of the resolution, 99.99% of unsecured creditors voted in favor of the resolution.

The meetings were chaired by the former Supreme Court justice, Judge (retired) BN Srikrishna.

” Scheme of arrangement between Reliance Industries Limited (ceding company) and its shareholders and creditors and Reliance O2C Limited (ceding company) and its shareholders and creditors has been placed before ” shareholders, secured and unsecured creditors for consideration and approval, the deposits mentioned.

Shareholders and lenders vote electronically. In February, RIL announced the contours of splitting its petroleum refining, fuel marketing and petrochemical (petroleum-chemical) businesses into an independent unit with a $ 25 billion loan from the parent company, while ‘She was looking to unlock value by paying for shares to global investors like Saudi Aramco.

The spin-off of Reliance O2C Limited (O2C) will enable the targeted pursuit of opportunities throughout the petroleum to chemicals value chain, improve efficiency through an autonomous capital structure and a dedicated management team, and attract pools of dedicated investor capital, according to a presentation of the company.

The transfer of the twin refineries in Jamnagar in Gujarat, petrochemical sites in several states and a 51% stake in the fuel retail business to O2C will be on a “cheap sale” basis, under reserve required approvals which are expected to arrive by September.

However, upstream oil and gas production fields such as KG-D6 and the textile business will not be part of the new unit, where it aims to retain a significant controlling stake.

Consideration for the transfer will be in the form of a long-term interest-bearing debt of US $ 25 billion to be issued by O2C to Reliance Industries Ltd (RIL). It is proposed that RIL’s external debt remains with RIL only.

When completed, RIL – the company founded by Dhirubhai Ambani in the late 1960s – will only house upstream oil and gas exploration and production, financial services, group treasury and businesses. textiles, and will act as the holding company of the group.

The retail business is owned in Reliance Retail Ventures Ltd and the telecommunications and digital companies are nested in Jio Platforms Ltd.

Long-term loans issued by O2C to RIL, as part of the reorganization, will provide an efficient mechanism for upstream liquidity generated from O2C to RIL, according to the presentation.

RIL is in talks with the Saudi Arabian Oil Company (Saudi Aramco) to sell a 20% minority stake in its O2C business, which, if successful, should lead to further deleveraging of the company.

(This story was not edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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