RIL raises Rs 3,400 cr more to fund Lyondell buy

Aiming for the takeover of Luxembourg-based LyondellBasell,Reliance Industries Ltd has raised 763 million...

Aiming for the takeover of Luxembourg-based LyondellBasell,Reliance Industries Ltd has raised 763 million Rs 3,465 crore on Monday,its third big equity fund raising in under four months. With this,the company has raised over Rs 9,000 crore 2 billion by selling treasury stocks in three tranches.

Reliance sold 33 million existing treasury shares at about 5 per cent discount to a clutch of foreign institutional investors. The deal follows a 577 million around Rs 2,675 crore share sale last week to state-run Life Insurance Corp of India and a 660 million around Rs 3,188 crore share sale by the countrys largest listed company in September.

Last week,Reliance had sweetened its offer to buy a controlling stake that valued LyondellBasell at 13.5 billion compared to its earlier bid of 12 billion. But Lyondell8217;s board had rejected Reliance8217;s sweetened offer,the Wall Street Journal reported.

They need the funds for acquisitions it could be either Lyondell or any other company, said an analyst. They do not want to stretch their balance sheet too much8230; They are obviously thinking of keeping their balance sheet as clean as possible in case they need to raise debt further.

A deal with Lyondell would catapult Reliance into the ranks of top petrochemical makers such as Saudi Arabia8217;s SABIC,Germany8217;s BASF and US-based Dow Chemical Co.

Acquiring LyondellBasell would also give Reliance a leg up in its efforts to gain greater access to the US and European markets. Its bid comes as petrochemical and refining asset prices have fallen globally in the wake of the financial crisis.

The latest share sale was priced at Rs 1,050,or 5 per cent below Reliances closing price on Friday.

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Lyondell filed for bankruptcy protection last January after being unable to meet its debt obligations when demand dropped for petrochemical products during the global economic downturn. In December,LyondellBasell filed an amended reorganisation plan with a US court,proposing a 2.8 billion rights issue,to simplify its corporate structure and exit bankruptcy protection with significantly less debt.

A court hearing on the amended reorganisation plan will not be held until after a February hearing on the validity of a settlement with a US units creditors.

The treasury stock created as a result of past mergers of subsidiaries with the parent company was held by Petroleum Trust and nominally recorded as promoters stake,but the stock cannot be voted as per the rules. Petroleum Trust held a 6.65 per cent stake in thecompany or 10.46 crore shares prior to the two stock sales.

The Petroleum Trust,which was formed in May 2002 by Reliance Industrial Investments,was created after the merger of erstwhile Reliance Petroleum Ltd RPL with RIL. Since Reliance Industrial Investments,which held RPL shares could not hold shares of the parent company,the Petroleum Trust was formed to house these shares. A merger of Indian Petrochemicals Corporation IPCL with RIL resulted in an increase in the number of treasury shares. With agencies