Reliance Industries Plans Refinancing of Its $12 Billion Debt

Reliance Industries Ltd. plans to refinance a significant portion of about $12 billion of borrowings that mature over the next three years and may sell bonds to repay the debt, according to company executives with knowledge of the matter. India’s largest company by market value will repay some of the debt coming due, mostly bonds and interest, the officials said, asking not to be identified discussing confidential matters. Reliance’s repayments from 2018 through 2020 will be its biggest for any previous three-year period and include about $8.14 billion of term loans, $3.52 billion of bonds and a $300 million revolver loan, according to data compiled by Bloomberg. It also has about $1.65 billion of interest payments, the data show.

reliance

Reliance’s borrowings have ballooned over the past five years as the group invested in building its telecom business, a pet coke gasification unit and in expanding petrochemicals capacities. The plan to tap the bond market is part of a larger trend that’s seen Indian corporates choosing bonds over loans for the first time in at least a decade. One of the fastest economic growth rates in the world and Prime Minister Narendra Modi’s reforms have attracted global funds to India, reducing costs for issuers. “There is a lot of appetite among investors for Indian issuers,” said Raj Kothari, head of trading at Jay Capital Ltd. in London. “Reliance being the biggest company from India with solid finances, there would be no challenges for the company in refinancing its debt.”

Controlled by second-richest Asian Mukesh Ambani, Reliance has sufficient cash though it won’t use it to repay maturing debt as the company’s credit ratings and strong finances enable it to raise funds at competitive rates, the people said. A Reliance spokesman did not respond to an email seeking comment. S&P Global Ratings has a BBB+ score on Reliance’s long-term debt, two levels above the sovereign; while Moody’s has the company at Baa2, a notch above the Indian government. Reliance’s $1 billion 4.125 percent 2025 notes was quoted at 139 basis points over U.S. treasuries, the tightest spread since issuance, and lower than the average of 185 basis points on an index of Indian investment-grade debt compiled by Bank of America Merrill Lynch. The company earned about 94 billion rupees, or about a quarter of the company’s profit before tax, in the year ended March by investing its surplus cash in interest bank deposits, debt securities and other instruments, according to its annual report.

Reliance has yet to decide whether to raise the funds for refinancing through local- or foreign-currency bonds, according to the people. The company hasn’t decided on the timing of any new issuance or on the amount it plans to raise, though it will probably use several tranches as debt matures, they said. India’s second-largest oil refiner had outstanding debt of more than $31 billion as on June 30 and cash of about $11 billion. Reliance generated an operating profit of about 147 billion rupees ($2.3 billion) in the quarter ended June, which suggests that the figure could be around 588 billion rupees for this financial year. Reliance’s reported debt numbers may actually increase over the next two to three years due to planned investments of about 550 billion rupees in the current fiscal and a “significant payment” due for capital spending and deferred liabilities, Kotak Securities had said in a report last month.

  • Bloomberg

+++

Reliance Industries to Buy BP's Malaysian Petrochemical Plant for $320 Million

Reliance Industries has agreed to buy BP Plc’s Malaysian petrochemical plant for USD 230 million, the British energy firm said. BP said, “It has agreed to sell all its interests in purified terephthalic acid (PTA) production in Malaysia to Reliance Global Holdings Pte Ltd (a unit of RIL).”

The RIL unit will take over BP’s 100 per cent equity in BP Chemicals (Malaysia) Sdn Bhd (BPCM), located at Kuantan on the east coast of Malaysia. The all-cash deal is planned to be completed in 2012, BP said in a statement. James Yim, Head of BP’s aromatics business in Asia, said, “This is an efficient plant with a good market position in the region. RECRON Malaysia, part of the Reliance Group, is already our largest customer in Malaysia and RIL is a significant feedstock supplier at Kuantan, so Reliance is a natural owner of this plant.”

Nick Elmslie, chief executive of BP Petrochemicals said, “BP has a major, global PTA business, with around one fifth of global PTA production capacity and a track record of leading technology.

“We will continue to concentrate our PTA strategy on deploying new technologies into high growth markets like China where we are in the middle of a considerable expansion programme, and in OECD markets where our technology gives us an advantage and high utilization rates.”

All current staff of BPCM are expected to transfer to the new owners under equivalent terms and conditions. BP said its acetic acid manufacturing and marketing business in Malaysia is unaffected by this sale. BPCM’s PTA plant, commissioned in 1996, has nameplate production capacity of 610,000 tonnes per year.

BP’s current net global PTA capacity is 7.5 million tonnes per year from eight sites in the US, Belgium, China, Indonesia, Malaysia and Taiwan. The largest is at Zhuhai, China with capacity of 1.5 million tonnes.

News source: Daily Bhaskar

Earlier posts on Reliance Industries

India is top exporter of petro products in Asia
RIL RPL merger at 1:16
World’s biggest petroleum refinery complex opens in Jamnagar
Reliance Industries starts crude production at KG-D6 block
India’s refining hub to be largest in world – Jamnagar
Reliance Buys Malaysian Yarn Maker Hualon Corp
Reliance buys into Gulf Africa Petroleum Corp

+++

Reliance Industries starts crude production at KG-D6 block

India’s largest private sector company, Reliance Industries Ltd., said it began producing crude oil from its KG-D6 block of the Krishna Godavari Basin on Sept 17, confirming media reports. Initial production levels are at 5,000 barrels of crude per day. Peak hydrocarbon production of 550,000 barrels of oil equivalent per day (boepd) is expected over the next six to eight quarters, the company announced at a press event over the weekend.

‘India’s current hydrocarbon oil and gas production is 1.3 million boepd. With Reliance’s contribution in the energy sector, India’s indigenous production of hydrocarbons will increase by over 40 percent in the next 18 months,’ chairman and managing director Mukesh Ambani told reporters.

The energy and petrochemicals major estimated that the production from KG-D6 facility will save India an annual foreign exchange outflow of $20 billion.

The KG-D6 block in Krishna Godavari basin is located in the Bay of Bengal, off the coast of eastern state of Andhra Pradesh. RIL holds 90 percent participating interest and Niko Resources Ltd. holds the balance.

P.M.S. Prasad, president and chief executive, oil & gas at RIL said Hindustan Petroleum Corp. Ltd. (HPCL) and Chennai Petroleum Corp. Ltd., have sent in bids for buying the crude. Prasad added the contracts with HPCL are likely to be more of spot contracts.

Mukesh and Nita Ambani with jars of crude oil from the Krishna Godavari basin

Prasad said: ‘We will be going in a next few days to gas productionStarting from January we will be producing gas.’ Mukesh Ambani’s RIL and Reliance Natural Resources Ltd. (RNRL), which is owned by estranged brother Anil Ambani, have been entangled in a legal battle which is centered on the pricing of gas from the KG Basin.

News courtesy: Forbes

Above pictures courtesy: Reliance PetroleumMotortrend and Rediff

+++

Reliance Industries eyeing nuclear power generation?

Reliance Industries Limited, RIL is looking to foray into nuclear power generation, reports CNBC-TV18 quoting sources. RIL is in talks with a French nuclear power company. RIL and the French company is looking for eight-ten sites in India. RIL has said that it will not comment on market speculation, and has strongly denied a foray into nuclear power generation at this point.

Mukesh Ambani, Chairman, RIL had said at the company’s Annual General Meeting that, “The second potential avenue for growth and transformation is in alternative energy. This is a natural extension of our conventional energy portfolio. I will be happy to share with you details once we have a concrete value creating plan in place.

It is not yet known who RIL is talking to, but the company does tend to go and forge partnerships with the largest companies in the world.

Rest of the article here

+++

Mukeshspeak – G8 has become outdated

mukesh ambani

Reliance Industries Ltd (RIL) chairman Mukesh Ambani said on Sunday that G8 has become outdated. “The G-8 has become outdated. How can you keep two billion people (from India and China) out of a group and make decisions about the world,” said Mr Ambani at the India Economic Summit. He said that there is a great disparity in the oil consumption in the world. The per capita consumption of oil is five barrels globally, for the US it is 25 barrels and for India it is only 1 barrel and therefore there will be increase in demand for oil consumption in future, said Mr Ambani. He said that while developed nations grew when oil prices were cheaper, the developing countries will have to grow at a higher oil prices.

“I was at an oil conference and the thing that struck me was a comment by one of the participants that Americans can’t really complain about oil prices reaching $80 or $100 per barrel as they pay $1,100 a barrel for Star Bucks coffee,” he said. “Once it was said that there was only 1 trillion barrels of oil in the world but we have already consumed that and we are getting to another one trillion barrels though even that will be only for 20 to 30 years,” Mr Ambani said.

+++

India's refining hub to be largest in world – Jamnagar

Reliance Industries and Essar Oil , India’s largest private sector oil refiners, are set to create the world’s biggest petroleum refining hub as part of plans to expand their plants in Jamnagar, western India. Essar has announced a $6bn expansion plan to more than triple capacity at its refinery, while Reliance, at its site a few kilometres away, is working on plans to almost double capacity.

essar reliance logo

The expansion projects will bring their combined refining capacity at Jamnagar to 1.9m barrels a day, the largest in the world in a single location, outstripping hubs such as Rotterdam and Singapore and those in China and South Korea, according to figures compiled by Fesharaki Associates Consulting and Technical Services, Singapore.

reliance refinery

An FCC regenerator being prepared for erection at the Reliance Petrochemical Complex in Jamnagar

Under their plans, Essar announced it was lifting capacity at its plant to 700,000 b/d by 2010 from 220,000 b/d. Reliance is in the middle of a $6bn investment to expand capacity to 1.24m b/d from 660,000 b/d by next year. Once the expansion works are complete, the nearest comparable hub will be South Korea’s Ulsan at 1.35m b/d, Facts said.

Prashant Ruia, Essar group director, said the total development cost of the refinery including the expansion would be $9bn, which analysts consider extremely cheap against the global average of about $13bn-$15bn for the same size plant.

Full article here.

+++