RIL to setup WOS for Digital platform initiatives

Reliance Industries

Digital platform company, including RJIL, to be virtually net debt free in line with global technology peers.

The Board of Directors of RIL approved the formation of a wholly-owned subsidiary (“WOS”) for Digital Platform initiatives and investment of Rs. 1,08,000 crore in the WOS through OCPS.

The WOS will also acquire RIL’s equity investment of Rs. 65,000 crore in RJIL.

Debt reduction in RJIL

The Board of Directors of RJIL approved:

• A scheme of arrangement between RJIL and certain classes of its creditors including debenture holders for transfer of identified liabilities of up to Rs. 1,08,000 crore to RIL

• Rights Issue of Optionally Convertible Preference Shares (‘OCPS’) aggregating up to Rs. 1,08,000 crore for the purpose of payment of consideration for transfer of identified liabilities – WOS to subscribe to this issue.

Consequent to the above, RJIL will become virtually net debt free company by 31st March 2020, with exception of spectrum related liabilities.

Like global technology peers, the Digital Platform Company with negligible leverage makes a compelling investment proposition for both strategic and financial investors, many of whom have evinced strong interest in partnering with us. It will have significant financial strength to address the Digital Services opportunity in India.

The proposed consolidated structure will be compliant with all statutory requirements.

Commenting on the formation of the Platform Company, Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries Limited said “This new Company will be a truly transformational and disruptive digital services platform. It will bring together India’s No.1 connectivity platform, leading digital app ecosystem and world’s best tech capabilities globally, to create a truly Digital Society for each Indian. Jio has been heralding the digital services revolution in India and will continue to do so in the years to come.

Given the reach and scale of our digital ecosystem, we have received strong interest from potential strategic partners. We will induct the right partners in our Platform Company, creating and unlocking meaningful value for RIL shareholders.”

Summary of Impact

• Ensures monetization opportunities accrue to shareholders efficiently;
• There is no impact in the value pre and post reorganization for any shareholder;
• There is no impact on the consolidated debt of RIL;
• Consolidation of liabilities in RIL creates an efficient structure to manage debt and cash;
• It does not impact RIL’s standalone credit profile given its robust cash flows and conservative leverage.