R-ADAG to raise stake in RNRL to 55 per cent; to make open offer

Our Corporate Bureau
16 March 2006

The board of Reliance Natural Resources (RNRL) has approved a preferential issue of equity shares to Reliance-ADAG, controlled by Anil Ambani. The company would issue shares at a price not less than Rs 25.65, the average share price after the share got listed in February.

A statement issued by RNRL said the board has approved the preferential offer of equity or equity-related instruments to R-ADAG and / or long term financial investors. It said the issue is aimed at strengthening the company's capital base and financial position.

R-ADAG would be investing around Rs 1,052 crore to increase its stake from under 40 per cent to around 55 per cent. After the issue, the net worth of the company would increase to Rs 1,660 crore from the current Rs 608 crore.

As per the SEBI takeover code requirements, R-ADAG would subsequently make an open offer for another 20 per cent of RNRL. The open offer would also be at the same price as the preferential issue to promoters. The offer, which would cost R-ADAG up to Rs 838 crore, opens on May 3, 2006, and closes on May 22.

RNRL has not disclosed any specific use for the funds being raised through the preferential issue. Apart from an agreement signed with Reliance Industries (RIL) for purchasing natural gas, other business plans of the company are also not known.

Under the agreement with RIL, RNRL would receive 28-million cubic metres of natural gas a day at a price of $3.18 per BTU, considerably lower than the current market price for gas. The company also has the right to buy up to 40 per cent of RIL's production above 53-million cubic metres per day, from already discovered gas fields.