Reliance Raises $763 Million in Block Deal

Indian energy major Reliance Industries raised $763 million, its third big equity fund raising in less than four months, as it readies to buy bankrupt petrochemicals firm Lyondellbasell. Reliance, controlled by India's richest man, Mukesh Ambani, sold 33 million existing treasury shares at about 5% discount to a clutch of foreign institutional investors, the arranger to the deal said. The deal follows a $577 million share sale to state-run Life Insurance Corp of India and a $660 million share sale by India's largest listed company in September. The deals are seen as part of Reliance's bid to take control of Luxembourg-based Lyondellbasell. A source recently told Reuters 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 Lyondell's board had rejected Reliance's sweetened offer, the Wall Street Journal reported.
Reliance has interests in petrochemicals, refining, oil and gas exploration and retail, and a deal with Lyondell would catapult it into the ranks of top petrochemical makers such as Saudi Arabia's Sabic, Germany's BASF and U.S.-based Dow Chemical. Acquiring Lyondellbasell would also give Reliance a leg up in its efforts to gain greater access to the U.S. and European markets. Its bid comes as petrochemical and refining asset prices have fallen globally in the wake of the financial crisis.
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 U.S. 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 U.S. unit's creditors