Cairn India completes $1.6 b financing for Rajasthan project

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Mr Rahul Dhir, CEO, Cairn India
Mr Rahul Dhir, CEO, Cairn India

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New Delhi, Oct. 14 Cairn India has completed financing arrangements for $1.6 billion for funding its Rajasthan project. In a statement issued here, the company said the borrowings were of a long-term nature with tenure of six years.

“The proceeds from this facility will be used to repay the existing facility of $850 million and to continue to fund the ongoing projects in Rajasthan. The financing has been arranged through a combination of US dollars and Indian rupee borrowing by accessing both domestic and international markets,” the company said.

The international borrowing of $750 million consists of a fully underwritten portion of $500 million by Standard Chartered Bank and $250 million loan by International Finance Corporation, a member of the World Bank group. The domestic borrowing has been underwritten by the State Bank of India for Rs 4,000 crore ($850 million). SBI Capital Markets Ltd acted as advisors to Cairn India for the domestic borrowing, the company said.

Mr Indrajit Banerjee, Chief Financial Officer and Executive Director, Cairn, told Business Line that “this is in line with our strategy to fund development projects through debt fund and realigning the capital structure to provide financial flexibility for the future.”

Stating that he was comfortable with Cairn’s financial position, Mr Banerjee said, “tapping both the domestic and overseas markets at the same time in a very unique manner, will help in improving the company’s liquidity position.”

For 2008-09, Cairn’s gross investment in Rajasthan project was estimated at $2 billion and for 2010-11 when the project is expected to be complete the gross investment is estimated to be between $1.5 billion and $1.8 billion.

Mr Rahul Dhir, Managing Director and Chief Executive, Cairn India, said “The financing has been completed by accessing two diverse markets on competitive terms in these current challenging times…..We stand committed to achieve our approved targets and deliver value to all our stakeholders.”

Cairn started production from the Mangala field in Rajasthan on August 29 and delivered its first volumes of crude oil to MRPL on October 8. The resource base has continually grown since the discovery of Mangala in 2004 and the focus in the coming years will be to realise the full potential of the Barmer Basin. The Mangala, Bhagyam and Aishwariya (MBA) fields together with their Enhanced Oil Recovery potential are being developed in sequence and when complete MBA production is expected to rise to at least 175,000 barrels of oil a day.

Stake hike

Petroliam Nasional Berhad (Petronas) has increased its stake in Cairn India Ltd. The Malaysian state-owned oil company owned a little over 12 per cent in Cairn India.

On Wednesday Cairn Energy Plc, the parent of Cairn India, informed the London Stock Exchange that Petronas has acquired another 43.6 million shares from it, representing 2.34 per cent stake. With this the total stake of Petronas in Cairn India increases to 14.94 per cent.

(This article was published in the Business Line print edition dated October 15, 2009)
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