The Hindu Business Line : Essar Oil finalises Rs 1,300-cr bond issue to ABB, promoters

The company has filed an application with the Foreign Investment Promotion Board (FIPB) seeking permission to issue foreign currency convertible bonds (FCCBs) worth Rs 1,300 crore to ABB Lummus Global BV as well as promoters of the company and their associates and nominees.

According to the application filed by the company, these bonds will be convertible into equity shares or global depository receipts or American depository receipts.

The timeframe for such conversion would be on or after 45 days from the closing date and up to 30 days prior to the maturity date. It also states that repayment will not be earlier than December 2010.

The bonds will carry an interest of 5 per cent per annum and the conversion price has been fixed at Rs 12.40 per share having a face value of Rs 10 each, following the pricing formula put in place by the Securities and Exchange Board of India (SEBI).

In the first phase, it plans issues up to $ 50 million under the Reserve Bank of India's automatic route. In the second phase, it plans to issue another $ 50 million worth bonds after seeking approval from the RBI, as stipulated in the new guidelines for external borrowings.

The remaining bonds worth $ 171 million will be issued in the third phase only after obtaining the requisite approvals from the Finance Ministry. According to the existing rules, this proposal, being in excess of Rs 600 crore, will have to be finally cleared by the Cabinet Committee on Economic Affairs after it gets a formal clearance from the FIPB.

The application further states that the bonds will be issued as per fund requirements of the company's refinery project and adds that the company has already applied to the Securities and Exchange Board of India (SEBI) for exemption from the requirement of the allotment of financial instruments within three months from the date of obtaining the members' approval in the extraordinary general meeting held in the third week of September this year as required under the provisions of the SEBI (Disclosure and Investor Protection Guidelines 2000 on preferential issue).

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