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Essar Global repays all debt to Indian and foreign lenders
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Essar Global has repaid
its last tranche of debt of Rs 12,000 crore to its various Indian and foreign
lenders.
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The Rs 12,000 crore
repayment is over and above Rs 30,000 crore (US$5 billion) repayment made to
lenders in 2017.
·
Essar Group has repaid Rs
1,37,000 crore of debt, which is the largest ever deleveraging by an Indian
corporate.
·
Essar Global has purchased
US$260 million face value notes issued by Mesabi Metallics Inc (Essar Steel
Minnesota)
Mauritius and Mumbai,7
January 2019: Essar Global Fund Ltd
(Essar Global), the holding company of the Essar Group of companies, today
reached yet another milestone in deleveraging by repaying the last tranche of
debt of Rs 12,000 crore (US$1.75 billion) to its various Indian and foreign
lenders. This is in addition to the Rs 30,000 crore (US$5 billion) repayment
made in August 2017 to various lenders from the proceeds of the Essar Oil
monetisation.
Over the past two years Essar Group has repaid more than Rs 1,37,000
crore (US$21 billion) of debt (including Essar Steel), majority of which is to
the Indian banking system. This is more than 80% of its group debt.
Essar Global has now repaid approximately Rs 6,300 crore to ICICI Bank,
Axis Bank and Standard Chartered Bank. With this, these banks have been repaid
their entire facility of Rs 31,500 crore, which they had provided to Essar
Global to fund its capital expenditure programme in 2008-14.
The only continuing lender to Essar Global is now VTB, which has been
working with Essar Global over the past three years to monetise certain assets,
strategically lighten the balance sheet, deleverage the group and reposition it
for growth in the future.
In addition to repaying all of its existing secured debt, Essar Global
has also simultaneously concluded a settlement with all lenders who had
provided debt facilities to erstwhile Essar Steel Minnesota Ltd and were
beneficiaries of unsecured guarantees from Essar Global. Lenders with whom
settlements have been concluded include various Indian banks led by ICICI Bank,
State Bank of India, as well as a consortium of international funds led by
Davidson Kempner. As part of the aforementioned settlement, Essar Global has
purchased US$260 million face value notes issued by Mesabi Metallics Inc. These
notes substantially constitute all of the debt of Mesabi, and paves the way for
Essar Global to once again participate in the low-cost iron ore mining and
pellet manufacturing project that is under construction in Minnesota, USA.
Essar Group
The Essar Group has undertaken a massive deleveraging programme, within
which it has repaid over Rs 1,37,000 crore (US$21 billion) of debt. The largest
such programme by any corporate in the history of India, this is now drawing to
a close. Essar is poised to take on the future with a much stronger and
sustainable balance sheet.
The deleveraging programme consisted of many parts, some of which
included:
In 2017, through the sale of Essar Oil Ltd to a consortium led by
Rosneft and Trafigura, Essar Global had repaid approximately Rs 86,000 crore of
group liabilities, including Rs 72,600 crore to banks.
Additional asset sales that have been concluded during the past two
years include the sale of Aegis to Teleperformance and CSP for approximately Rs
6,000 crore (US$910 million), and the sale of Equinox Business Parks to
Brookfield Asset Management for Rs 2,400 crore (US$360 million). The proceeds
from these sales have also been utilised to further deleverage the group.
A further Rs 45,000 crore of group debt relating to Essar Steel India is
being addressed through the ongoing IBC process. In this regard, lenders have
already received an offer from Arcelor Mittal offering them cash repayment of
Rs 42,000 crore. A subsidiary of Essar Global has separately offered Rs 54,389
crore, which provides a full repayment to the secured lenders as well as the
operational creditors. Subject only to the conclusion of the ongoing court
process, Indian banks will receive full repayment of their entire exposure to
Essar Steel India.
In addition, Essar has paid Rs 3,955 crore to minority shareholders of
Essar Oil, which represents a 2,420% return over their original investment, and
Rs 1,400 crore to minority shareholders of Essar Ports.
Commenting on the above, Mr
Prashant Ruia, Director-Essar Capital, said:
“In 2008, Essar had commenced a massive Rs 1,20,000 crore investment
programme across the sectors of energy, infrastructure, metals & mining,
and services. Adverse regulatory and governmental actions—including
cancellation of natural gas supply by the Government of India, and of coal mine
allocations between 2010 and 2015, which were both unanticipated and outside of
Essar’s control—affected some of Essar’s businesses. This resulted in a
build-up of excessive leverage across the group, even as Essar committed to
provide substantial infusion of new equity in its businesses.
Over the past two years we committed ourselves to a massive deleveraging
programme and have repaid more than Rs 1,37,000 crore to our lenders, most of
which will go to the Indian bankers and lenders.
The premium valuations being placed on the various assets that have been
sold by Essar are testament to the quality of these assets and businesses we
have built over the years.
With the deleveraging programme now drawing to a close, and with a much
stronger and sustainable balance sheet, we look forward to repositioning
ourselves for growth.”
Following the completion of its monetisation programme, the Essar Group
has revenues of $11.5-billion and has a strong presence in the sectors of
Energy, Infrastructure, Metals & Mining, and Services. The Group will
continue its focus in these sectors, and will evaluate more opportunities in
existing, as well as new sectors.
About Essar
Essar Global Fund is a global investor diversified across the core
sectors of Energy, Infrastructure, Metals & Mining, and Services. The
portfolio companies have aggregate revenues of about US$11.5 billion and employ
over 4,500 people. We identify opportunities, build & nurture world-class
assets, monetise them and re-invest, thereby constantly creating value for all
stakeholders.
Media
Contact:
Essar
Manish
Kedia, Senior Vice President -
Corporate Affairs, Essar
Ravi
Muthreja, Vice President -
Corporate Communication, Essar
Adfactors
PR
Phone: +91 9769998892, Email: hiral.vora@adfactorspr.com
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