The Facebook deal is a huge deal for Reliance(RIL)
If reliance uses the cash inflows recieved from U.S based tech giant Facebook.Inc Debt can be reduced by 80%( source-MONEY CONTROL)
RELIANCE INDUSTRIES has a long term debt rating of AAA, RIL has issued in two parts :-
1.Floating rate of raising Debt
Rate of interest = REPO Rate 4.4% +280bps = 7.2% Rs.4500 crores
2.Floating rate of raising Debt
Rate of interest = Fixed rate = 7.2% Rs.4000 crores
TOTAL DEBT RAISED BY RELIANCE INDUSTRIES LTD Rs.8500 crores
The debt taken by the company has spark the leverage in BALANCESHEET of Reliance Industries Limited.
NOW COMES THE RECENT NEWS.
NOW COMES THE RECENT NEWS.
Facebook is going to buy 9.9% stake in JIO platforms which is wholly owned subsidiary of RELIANCE INDUSTRIES LIMITED for RS.43574 CRORES.
Table: RIL's debt metrics
Now the RELIANCE INDUSTRIES LIMITED has two options
OPTION 1 To use the fund received from divesting 9.9% shares in jio platforms for funding of different new projects.
OPTION 2 To use the fund received from Facebook,BP and Aramco to deleverage ie repay the loan and take one more step to its aim of becoming zero debt.It can reduce its debt by 80% or it can repay its 50 % debt if Armaco deals is not considered.RELIANCE JIOS DEBT COULD BE REPAID FROM FACEBOOK INFLOW.
Lets see market reaction on news
The
The market has preceived it as positive signal and it has rose about 10.30% and Rs.126.10 in a single day which is a huge jump in times of COVID-19.
Let us see which option does management opts for in future It is more likely that RIL would deleverage its debt to strenghthen its balancesheet till march 21.
Lets see speech of RELIANCE CHAIRMAN MUKESH AMBANI
MY analysis on Reliance Facebook Deal
Reliance partnership with facebook and microsoft could give great amount of synergy to network telecom. It would challenge great players like amazon and groofers. As it is a startegic news on moneycontrol :-
JioMart will fulfil orders placed through WhatsApp or Facebook, payments can happen digitally through WhatsApp Pay, completing the digital journey for the consumer.
INDIA IS GOING FOR BIG DIGITAL CHANGE LIKE JIO LAUNCH.
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