Merger with Reliance Petro has no rating impact on Reliance Industries: S&P

Mumbai: Standard & Poor's Ratings Services today said that there is no immediate impact on its corporate credit ratings on Reliance Industries Ltd's current BBB/Negative ratings, following the merger proposal announced with its 70.38 per cent-owned subsidiary Reliance Petroleum Ltd, which is unrated by S&P.

The merger would involve RIL buying back Chevron Corp's 5-per cent stake in RPL for Rs1,350 crore in the next two months and the issue of 1 new RIL equity share for every 16 RPL shares to minority shareholders of RPL.

The transaction is subject to shareholder, government, regulatory, and other approvals and is expected to be completed in the next three to six months.

"We expect the proposed merger to further enhance RIL's global scale of integrated production facilities and strong competitive position in petrochemicals and oil refining," the rating agency said in a statement.

"However, the company continues to remain exposed to higher debt levels, pressure on profitability due to downturn in commodities and oil refining, and uncertainties on the size of cash flow from upstream gas operations," the S&P statement added.