Ambani to sell stake to Aramco, BP to make Reliance debt-free by March 2021
Mumbai: On a mission to cut debt in Reliance Industries, billionaire Mukesh Ambani on Monday announced plans to sell stakes in the firm's oil and chemicals business to Saudi oil giant Aramco and in fuel retail network to BP plc for Rs 1.15 lakh crore, and said its telecom unit Jio will begin offering fibre-based broadband services from next month.
Saudi Aramco will buy a 20 per cent stake in the oil and chemicals business of Reliance, including the 1.36 million barrels a day Jamnagar refining complex in Gujarat, for an enterprise value of USD 75 billion. BP will buy 49 per cent stake in the firm's 1,400 petrol pumps and aviation fuel selling facilities at 31 airports for another Rs 7,000 crore.
The twin deals along with deleveraging of telecom arm Jio's infrastructure assets will help Reliance become "a zero-net debt company within the next 18 months, that is by March 31, 2021", Ambani said at the company's annual general meeting (AGM) here.
Reliance as a whole has an enterprise value of about USD 134 billion, including telecom and retail businesses.
The company, which had a net debt of Rs 1,54,478 crore as on March 31, 2019, also intends to list its retail and telecommunication units within five years, he said.
A zero-net debt company would mean that borrowings fall below cash reserves with the firm, a level Reliance hasn't seen since 2013. It had an outstanding debt of Rs 2,88,243 crore as on June 30, 2019, and a cash balance of Rs 1,31,710 crore as on June 30.
Reliance has invested Rs 5.4 lakh crore, mostly in debt, in the last five years in the expansion of its oil to chemicals business, creating 4G wireless telecom network that offers high-speed internet and in setting up India's largest retail chain.
The debt levels had raised concerns among analysts including at Credit Suisse Group AG which felt the ballooning borrowings would weigh on growth.
Ambani sought to allay those fears.
"With these initiatives, I have no doubt that your company will have one of the strongest balance sheets in the world," he said. "We will also evaluate value unlocking options for our real estate and financial investments."
Announcing a 'new Reliance', Ambani said the Saudi investment is "the biggest foreign investment in the history of Reliance" and "among the largest foreign investments in India."
BP had previously bought a 30 per cent stake in 21 oil and gas blocks of Reliance for USD 7.2 billion in 2011.
The deal with Aramco covers all of Reliance's refining and petrochemicals assets as well as the remainder of stake the firm has in fuel retailing business after selling 49 per cent to BP, he said.
The world's biggest crude producer, Aramco will also supply 5,00,000 barrels of crude oil to Jamnagar refineries, roughly double of the amount Reliance buys from Saudi Arabia currently.
Stake in Reliance business is apart from 50 per cent interest Aramco along with UAE's ADNOC is picking up in a planned USD 60 billion refinery on the west coast of India. These investments are part of Aramco's plan to double oil processing capability under its belt to 10 million barrels a day by 2030, locking in friendly buyers for the Kingdom's crude.
The deal is subject to due diligence, definitive agreements, and regulatory and other approvals, Ambani said.
Later talking to reporters, Reliance executive director P M S Prasad said the Aramco deal is targeted to be completed by March 2020. "Within five years, the oil-to-chemicals business will be carved out as an unlisted subsidiary of Reliance and will operate as a business division of RIL with the Aramco having 20 per cent economic interest."
At the AGM, Ambani announced roll out of fibre-based fixed-line broadband services from September 5, offering internet speed of at least 100 Mbps, free voice calls for life and HD television sets given for free along with the connection that would come for as low as Rs 700 per month. Calls will be free on fixed lines phones to anywhere in the country.
Reliance has received "strong interest" from strategic and financial investors for its consumer businesses -- telecom venture Jio and Reliance Retail, he said without giving details.
With these initiatives, Reliance will have one of the strongest balance sheets in the world.
"As we achieve our zero-net debt target, I assure you, my dear shareholders, that we will reward you abundantly through higher dividends, periodic bonus issues and other means, and at a more accelerated pace than any time in our history," he said.
With over 340 million mobile phone subscribers, Jio is now venturing into optical-fibre-based fixed-line broadband service, called JioFiber.
"Today, I want to announce that starting September 5 of this year - on the third anniversary of Jio's launch - we are launching JioFiber services on a commercial basis," he said.
Watched by his mother Kokaliben and children, he said as India is getting transformed into 'New India', "Reliance will also transform itself into New Reliance".
"We also have large and valuable real estate assets, and have a strong portfolio of financial investments," he said. "On the strength of our existing and new growth engines, I am very confident that we can grow this by 15 per cent annually over the next five years.
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Real Madrid fines Valverde and Tchouaméni half a million euros each for altercation
Barcelona (AP): Real Madrid slapped players Federico Valverde and Aurélien Tchouaméni with half-a-million-euro ($588,000) fines on Friday for their altercation during practice.
The massive fines came a day after the midfielders tussled when the team trained. Valverde said in a post on social media on Thursday that no punches were thrown. But Valverde knocked his head on a table and he suffered a small cut that required a brief hospital visit.
On social media, Valverde initially called it a “meaningless fight” with a teammate and said “everything has been blown out of proportion."
His employers, however, considered it a significant enough breach of team discipline to nail both Valverde and Tchouaméni with fines that bite even the bank account of a top soccer player. The half-a-million euro penalties reflect the reputational damage the club was enduring in a chaotic end to a disappointing season.
In a statement, the 15-time European champion said its disciplinary action was concluded after both players expressed to the club “their complete remorse for what happened and apologized to one another.”
Madrid added they also apologized to their teammates, the coaching staff and club supporters, as well as showing their willingness to accept whatever disciplinary action the club deemed “opportune.”
Tchouaméni was back training with Madrid on Friday, two days before they play at Barcelona in a clasico. Madrid has to win otherwise Barcelona will be crowned La Liga champion.
After being notified of the fine, he posted a public apology to the club and its fans on social media.
“What happened this week in training is unacceptable,” Tchouaméni wrote. "I say this while thinking about the example we are expected to set for young people, whether in football or at school.
“Above all, I am sorry for the image we projected of the club.”
Valverde was not at practice due to the head knock.
Both players are set to play in the World Cup next month, with Tchouaméni playing for France and Valverde for Uruguay.
Chaotic end to a poor season
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The run-in between the players, who for seasons have played side by side in Madrid's midfield, came after they argued this week in previous training sessions. But tempers boiled over on Thursday. Spanish media was rife with reports that the players previously disagreed over the club's decision to let coach Xabi Alonso go after just months on the job.
It was not the only altercation involving Madrid players during training this week. Álvaro Carreras confirmed he was in a “minor” incident with a teammate. Spanish media said he and fellow defender Antonio Rüdiger got into a scuffle.
Álvaro Arbeloa, the coach who was promoted from Madrid's reserve team when Alonso was fired in January, will face tough questions on what went wrong inside the changing room when he gives a press conference on Saturday ahead of the clasico at Camp Nou.
Madrid is facing a second consecutive campaign without a major trophy amid rumors in the Spanish media that club president Florentino Pérez is considering bringing back Jose Mourinho to straighten out his underperforming team.
