Essar Global repays ₹12,000 cr. loans

Essar Global Fund Ltd. , the holding company for the Essar group of companies, on Monday repaid a debt of ₹12,000 crore to its various Indian and foreign lenders.

This is in addition to the ₹30,000 crore that it had repaid in August 2017 to various lenders from the proceeds of the Essar Oil sale.

Over the past two years, the Essar Group has repaid over ₹1,37,000 crore ($21 billion) of debt (including that of 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. The loans had been provided to Essar Global to fund its capital expenditure programme between 2008 and 2014.

The only continuing lender to Essar Global now is 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 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 ICICI Bank and State Bank of India. It also includes a consortium of international funds led by Davidson Kempner. As part of this, 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 in the U.S.

Sale of Essar Oil

In 2017, through the sale of Essar Oil to a consortium led by Rosneft and Trafigura, Essar Global had repaid approximately ₹86,000 crore of group liabilities , including ₹72,600 crore to banks.

Additional asset sales that have been concluded in the past two years include the sale of Aegis to Teleperformance and CSP for approximately ₹6,000 crore, and the sale of Equinox Business Parks to Brookfield Asset Management for ₹2,400 crore.

A further debt of ₹44,000 crore of group debt relating to Essar Steel India is being addressed through the ongoing IBC process. The lenders have already received an offer from ArcelorMittal for a cash repayment of ₹42,000 crore. A subsidiary of Essar Global has separately offered ₹54,389 crore, for full repayment to secured lenders and operational creditors.

In addition, Essar has paid ₹3,955 crore to minority shareholders of Essar Oil, which represents a 2,420% return over their original investment and ₹1,400 crore to minority shareholders of Essar Ports.

Commenting on the deleveraging exercise, Mr. Prashant Ruia, director-Essar Capital, said, “In 2008, Essar had commenced a massive ₹1,20,000 crore investment programme across the sectors of energy, infrastructure, metals and 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 ₹1,37,000 crore to our lenders,” he said Prashant Ruia, director, Essar Capital.

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, the group was looking we look forward to repositioning itself for growth, he added.

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Printable version | Oct 16, 2021 8:18:33 PM |

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