Essar restructures FRN debt

MUMBAI MAY 22. Essar Steel, a leading manufacturer with a capacity of 2.4 million tonnes per annum of hot rolled (HR) coils has reached a major milestone with the settlement of its Floating Rate Note (FRN).

The proposals to restructure its $250 million FRN debt were approved on May 20 in London at the meetings of note-holders for all the three series, the Essar group confirmed. The proposals form part of the company's comprehensive debt restructuring programme with its major creditors approved by the CDR Group established with its secured lenders.

With this approval, the company will achieve a reduction in its overall debt burden by $175 million (about Rs. 825 crores) and the net worth will improve to that extent with corresponding savings in its future interest obligations.

The proposals included a cash alternative to the new dollar notes, offering noteholders the option to redeem their existing notes at 24 cents in the dollar principle amount or a further alternative to exchange their existing notes for a new Indian rupee note with a maturity date of 2018, carrying a fixed interest rate of 8 per cent. The Indian rupee notes are to be issued on a "non-repatriation basis.'' The resolution for restructuring has been passed successfully with more than 90 per cent of the noteholders voting in favour. Seventy and a half per cent of noteholders opted to redeem their notes for the cash alternative at 24 cents in the dollar and a further 14-1/2 per cent opted to accept Indian rupee notes.

The remaining 15 per cent will receive the new dollar note to be issued by the company carrying interest at 1/4 per cent per annum with a redemption date 2018.

Essar Steel is part of Rs. 17,000-crore Essar group having interest in shipping, power, oil and gas and telecom.

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