Reliance Industries Ltd (RIL) expects to complete the spin-off of its oil-to-chemicals business (O2C) into an independent subsidiary by second quarter of FY22. The step resulting into the formation of new firm Reliance O2C Ltd. will allow RIL to sell 20 per cent stake in the unit to Aramco, the Saudi national oil company.
In a notification to exchanges, RIL said that the promoter group will continue to hold a 49.14 percent stake in the O2C business after the reorganization and that the process will result in no change in shareholding of the company.
The existing O2C operating team will move to the newly created subsidiary with the transfer of business, but there will be no dilution of earnings or any restriction on the cash flows, RIL said.
According to the conglomerate, all of its refining, marketing and petrochemical assets will be transferred to the O2C subsidiary. The move is expected to facilitate value creation through strategic partnerships, including the deal with Saudi Aramco, and attracting dedicated pools of investor capital.
RIL has also extended an interest-bearing loan of $25 billion to the O2C business. The O2C business will pay floating rate interest linked to one-year SBI MCLR rate. The loan to the O2C business will be paid as and when the strategic investors come in.
The company has already received approvals from market regulator SEBI and stock exchanges. At the same time, it needs approvals from shareholders and creditors, regulatory authorities and Income-Tax Authority, and National Company Law Tribunal’s (NCLT) Mumbai and Ahmedabad benches.