Billionaire industrialist Mukesh Ambani-led Reliance Industries is believed to have hired banking majors SBI, Bank of America and Citigroup among others to raise debt of about USD 1.1 billion (about Rs 5,000 crore).
The energy-to-retail conglomerate plans to utilise the fresh five-year term loan to refinance its existing higher interest rate debts, sources said. When contacted, a company spokesperson did not comment on the debt raising plans.
The banks hired for raising USD 1.1 billion of loans include SBI, Stanchart, Bank of America, RBS, HSBC, ANZ Bank, Bank of Nova Scotia, Bank of Tokyo Mitsubishi UFJ, Barclays, BNP Paribas, Citigroup, DBS and Sumitomo Mitsui.
Earlier this month, Chairman and MD Mukesh Ambani said at the company's AGM that RIL would become debt-free on net basis in the current financial year ending March 2012. RIL had an outstanding debt of Rs 67,397 crore (USD 15.1 billion) as of March 31, 2011, as against Rs 62,495 crore (USD 13.9 billion) a year ago. At the same time, RIL had cash and cash-equivalents of Rs 42,393 crore (USD 9.5 billion) as on March 31 this year, which was nearly double the level seen a year ago.
The company began a process last month to raise fresh loans worth about USD 1.5 billion. Out of this, loans worth about USD 1.1 billion are for repaying its existing loans maturing in next two years, while the company would also look at further USD 400-500 million of fresh borrowings from abroad.
Last year in October, RIL had raised USD 1.5 billion for the first time through bonds denominated in US dollars. While it raised USD one billion through 10-year bonds, another USD 500 million were arranged through sale of 30-year bonds. These funds were raised through RIL's wholly-owned subsidiary Reliance Holding USA Inc. This USD 1.5 billion bond sale was the company's first such bond issue after 13 years.
Besides, it was the largest ever public market offshore bond offering by RIL and largest ever corporate bond from India. This debt raising exercise was followed by plans to raise funds through sale of bonds in global markets by other Indian companies. These companies included the likes of Anil Ambani group firm Reliance Communications, ICICI Bank, Axis Bank, Essar Energy, JSW Steel and IDBI Bank.