Essar Global Fund Ltd (Essar Global), the holding company of the Essar Group of companies on Monday repaid the last tranche of debt of ₹12,000 crore ($1.75 billion) to its various Indian and foreign lenders.
This is in addition to the ₹30,000 crore ($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 ₹1,37,000 crore ($21 billion) of debt (including Essar Steel), majority of which is to the Indian banking system and constitutes more than 80% of its group debt, said a company statement.
Essar Global has now repaid approximately ₹6,300 crore to ICICI Bank, Axis Bank and Standard Chartered Bank. With this, these banks have been repaid their entire facility of ₹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, said the statement.
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 $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.
On a group level, the Ruias led firm has undertaken a massive deleveraging programme, within which it has repaid over ₹1,37,000 crore ($21 billion) of debt, largest such programme by any corporate in the history of India.
Commenting on the deleveraging exercise, 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."
Following the completion of its monetisation programme, the Essar Group has revenues of $11.5-billion and has a 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, the statement added.
