Replaces it with a new debt facility of about Rs.9,100 crore on commercial terms
Essar Oil said it had completed the process for exiting the corporate debt restructuring (CDR) loan facility set up in December 2004 to help cover the construction of its Vadinar refinery in Gujarat.
The CDR loan facility has been replaced with a new debt facility of about Rs.9,100 crore on commercial terms from similar group of lenders, the company said in a statement.
“The CDR exit marks a significant step forward for Essar Oil. Complete stabilisation of our expanded capacity paves the way for us to move forward positively to maximise value for all our stakeholders. Capacity expansion and high complexity have already improved our profitability,” Lalit Gupta, Essar Oil Managing Director and Chief Executive Officer, said.
“The CDR exit will lead to greater operational and financial flexibility for the organisation. We have begun the process of swapping our costly rupee debt with cheaper dollar loans that will lower our interest cost significantly, improve our cash flow, and strengthen the balance sheet,” said Suresh Jain, Chief Financial Officer, Essar Oil.
‘Dollarisation’ of rupee debt
In addition, as part of ‘dollarisation’ of its rupee term debt, Essar Oil has refinanced Rs.2,611 crore of rupee term loans into equivalent foreign currency debt of $481 million through ECBs /Swaps. This will help reduce long-term interest cost.
The company had received RBI approval of $2.27 billion to replace its high cost rupee debt with ECBs, and now with the CDR exit, the company will be able to refinance the remaining rupee loans to ECB, the company said.