Rosneft-arm Nayara Energy raises ₹2,400 crore

Our Bureau Mumbai | Updated on August 07, 2018

Aims to cut borrowing costs and rejig debt

Oil refining and marketing company Nayara Energy Limited has raised ₹2,400 crore through non-convertible debentures (NCDs) in the domestic market to cut borrowing costs on the high-interest loans it inherited while acquiring Essar Oil last year.

Russian oil major Rosneft and Kesani Enterprises (a venture of commodity trader Trafigura group and Russian fund UCP Investment Group) bought a 49.13 per cent equity stake each in Nayara Energy Limited, along with captive port and power assets from Essar group at an enterprise value of $12.9 billion.

Nayara Energy runs India’s second largest single site refinery at Vadinar, Gujarat, with a current capacity of 20 million tonnes per annum.

Nayara Energy inherited some $5 billion in high-interest loans from the deal, which it refinanced through new loans at better terms. “The NCD issue is part of a plan to further re-finance the loans and cut interest costs,” Nayara said.

The proceeds of the issue will be utilised mainly towards working capital requirements and refinancing of existing debt of the company, it said in a statement.

“It is a landmark event in the history of the company, being the first foray in the Indian debt capital market. The over-subscription of the issue shows the confidence of investors in the renewed identity of the company,” said B Anand, Chief Executive Officer of Nayara Energy.

“The success of the debut capital market issue will open up an alternate market for fund raising, which will not only provide flexibility in capital structure but will also further optimise the interest cost,” said Anup Vikal, Chief Financial Officer of the company.

“Despite being the maiden bonds issuance by the company and one of the largest issuance by amount in unlisted bonds category, we were able to evince significant interest from various institutional investors,” said Shashikant Rathi, Treasurer at Axis Bank Ltd, the sole arranger to the NCD issue.

Published on August 07, 2018

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