- Jio Platforms filed its draft red herring prospectus with SEBI for an IPO
- The IPO comprises a fresh issue of 27 crore equity shares
- Up to Rs 27,500 crore of proceeds will repay Reliance Jio Infocomm debt
Jio Platforms Ltd. is well on track for going public after filing its draft red herring prospectus with the Securities and Exchange Board of India on Friday. The IPO is fresh issue and comprises of 27 crore equity shares, as per the DRHP.
While the billionaire Mukesh Ambani-led company has not revealed details such as issue price band, total value of the offer and dates; it did mention that a large chunk of the proceeds is going to be utilised for prepaying or repaying outstanding borrowings by its material subsidiary Reliance Jio Infocomm.
ALSO READ: Jio IPO: Draft Papers Filed, Offer Comprises Only Fresh Issue Of 27 Crore Shares
The company plans to use up to Rs 27,500 crore of the net proceeds to prepay or repay, in full or in part, outstanding borrowings availed by its material subsidiary, Reliance Jio Infocomm.
Further, Jio flagged that it has incurred significant indebtedness which may hinder its ability to meet financial and other obligations, in turn adversely affecting the company's business.
"We have incurred significant indebtedness. Our inability to meet our obligations, including financial and other covenants, under our debt financing arrangements could adversely affect our business, financial condition, results of operations and cash flows. Further, we may not be able to fund our capital expenditures and expansion efforts, which could have an adverse impact on our business," the company said in its DRHP.
Additionally, the proportion of borrowings proposed to be prepaid among all the various borrowing arrangements entered into by RJIL, will be based on various factors, such as:
- The maturity profile and the remaining tenor of the borrowing,
- Cost of the borrowing and any conditions attached to the borrowings (like restriction to the ability to prepay the borrowings and time taken to fulfill)
- Provisions of any laws, rules and regulations governing such borrowings,
- Other commercial considerations including, among others, the amount of the loan outstanding.
However, the Reliance Jio emphasised that it cannot assure that the deployment of the net proceeds will take place as planned and as described in the DRHP.
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