Essar Global repays ₹12,000-crore debt

Our Bureau Mumbai | Updated on January 07, 2019 Published on January 07, 2019

Essar Global Fund, the holding company of the Essar Group of companies, has paid the last debt tranche of ₹12,000 crore ($1.75 billion) to various Indian and foreign lenders as part of its efforts to de-leverage balance sheet and support the last-ditch attempt to salvage the flagship Essar Steel from insolvency proceedings.

The fresh payment is in addition to the ₹30,000 crore ($5 billion) repayment made last August to various lenders from the proceeds of the Essar Oil monetisation, said the company in a statement on Monday.

Over the past two years, Essar Group has repaid about ₹137,000 crore ($21 billion) of debt (including Essar Steel), which account for about 80 per cent of its overall debt.

Essar Global has now repaid about ₹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, which was provided to fund Essar Global capital expenditure programme in 2008-14. In addition to repaying secured debtors, Essar Global has also concluded a settlement with other lenders who had provided debt facilities to erstwhile Essar Steel Minnesota and were beneficiaries of unsecured guarantees from Essar Global.

Lenders with whom settlements have been concluded include various Indian banks led by ICICI Bank, State Bank of India and a consortium of international funds led by Davidson Kempner. As part of the settlement, Essar Global has repurchased $260 million face value notes issued by Mesabi Metallics Inc (formerly Essar Steel Minnesota LLC).

These notes constitute substantial 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 that is under construction in Minnesota, US.

Russia’s VTB is the only continuing lender to Essar Global. VTB has been working with Essar Global over the past three years to monetise certain assets and strategically lighten the balance sheet.

Published on January 07, 2019
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