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RPL offers exit route to shareholders thru GDR

Our Bureau

MUMBAI, May 18

RELIANCE Petroleum Ltd (RPL) on Friday announced an exit route to its shareholders through an international GDR offering. The company has offered to convert its existing equity shares into global depository receipts.

Mr Anil Ambani, Managing Director, RIL, had said while announcing fiscal 2000-01 performance of the group that Reliance Industries Ltd (RIL) would divest 13 per cent of its 64 per cent holding in RPL in the international market. Now the company has decid ed to extend the offer to all its shareholders.

RPL is the first to take advantage of the policy change announced by the Finance Minister in the Union Budget - allowing two-way fungibility for ADRs and GDRs.

According to an RPL release, the offering is aimed at ``unlocking the value in RPL to benefit shareholders in Reliance Industries Ltd (RIL)''. It said the transaction would lead to realisation of substantial capital gains, generation of incremental cash resources for RIL, lowering of the cost of its balance shareholding in RPL and unlocking value without impacting management control.

Capital gains on the 13 per cent holding of the promoters would work out to around Rs 2,400 crore at current prices. The market capitalisation of RPL is currently in excess of Rs 27,000 crore.

RIL shares closed at Rs 374, down Rs 10 from Thursday's close of Rs 384 on BSE. RPL closed marginally down at Rs 53 compared to Thursday's close of Rs 53.20.

The offering would broaden its international investor base, and help finance growth opportunities in marketing, distribution, pipelines, storage, terminals etc, the release said.

The release said participating shareholders would have two options on pricing - they can indicate the minimum price at which they would be willing to offer their holding or opt for the cut-off price determined by the lead managers, Karvy Consultants Ltd (KCL). The size, timing and pricing of the GDR offering, in one or more tranches, will be determined by KCL.

Participating shareholders will be required to keep the tendered shares in an escrow account up to March 31, 2002, or completion of all tranches of the proposed offering. The shares would be required to be transferred to the escrow account in demat form between May 19 and June 2, the release added.

However, this could create a curious scenario if a large number of shareholders decide to participate in the offering. An analyst said in such a situation, the floating stock of the company would be greatly reduced because of the large quantity stuck in the escrow account.

``That is not a welcome prospect as it presents a good opportunity for unscrupulous operators to make a fast buck,'' he said.

Related links:
Reliance plan to divest stake in RPL cleared
Divestment to foreign investors -- Reliance to offload 13 pc stake in RPL
Reliance Petro posts Rs 1,464-cr profit

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