The Hindu Business Line : Essar Shipping & Logistics raises $200 m from overseas market

Future plans
"We have no concrete ship acquisition programme. We will buy new assets depending on market conditions prevailing at that point of time. The acquisitions will be in the tanker segment, which is the mainstay of our business."

Mumbai , Aug. 23

Cyprus-registered Essar Shipping and Logistics Ltd (ESLL), which owns 77 per cent of Essar Shipping Ltd, has raised $ 200 million from the overseas banking markets. The fund will be utilised to part-finance its $300-million ship acquisition programme.

This 10-year facility was fully underwritten by De Nationale Investerings Bank N.V. at a pricing of LIBOR plus 120 basis points. A consortium of international banks, including Den Norske Bank of Norway, Nordea Bank, Deutsche Verkehrs Bank AG and Bank of Scotland participated in this facility.

This is the first exercise in raising money from the overseas market by the company after the Essar Group recently restructured its shipping, logistics and Vadinar oil terminal businesses by launching the fully owned subsidiary ESLL.

Overseas market

Although the company had claimed that the restructuring was aimed at giving sharper focus to these businesses and increasing shareholders value, analysts had pointed out that one of the intentions could be to facilitate the new entity to tap overseas market for funds to finance its expansion programme.

Mr. Sanjay Mehta, CEO of ESLL, who is currently in London, told Business Line that the company had no concrete plans to raise further funds at the moment.

On ESLL's ship acquisition programme, he said that as this was a credit line, the company would utilise the funds as and when it decided to buy ships. "We have no concrete ship acquisition programme. We will buy new assets depending on market conditions prevailing at that point of time. The acquisitions will be in the tanker segment, which is the mainstay of our business," he said.

The company currently owns a fleet of 26 vessels, including VLCCS, tankers and bulk carriers. It is engaged in servicing the transportation needs of major global and Indian oil companies such as Shell, Exxon Mobil, Chevron BP Aramco, Texaco, Bharat Petroleum and Indian Oil Corporation.

Asked if its Vadinar terminal needed further investments, Mr Mehta said the company has already invested the entire outlay and the terminal would commence operations from next month. It has a throughput capacity of 32 million tonnes.

After the restructuring, ESLL has three subsidiaries — Essar Shipping, Essar Logistics and Vadinar Oil Terminal Ltd.

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