Essar Global Fund Ltd (Essar Global), the holding company of the Essar Group of companies, reached yet another milestone in deleveraging by repaying the last tranche of debt of Rs 12,000 crore (US$1.75 billion) to its various Indian and foreign lenders. This is in addition to the Rs 30,000 crore (US$5 billion) repayment made in August 2017 to various lenders from the proceeds of the Essar Oil monetisation.
Over the past two years Essar Group has repaid more than Rs 1,37,000 crore (US$21 billion) of debt (including Essar Steel), majority of which is to the Indian banking system. This is more than 80% of its group debt.
Essar Global has now repaid approximately Rs 6,300 crore to ICICI Bank, Axis Bank and Standard Chartered Bank. With this, these banks have been repaid their entire facility of Rs 31,500 crore, which they had provided to Essar Global to fund its capital expenditure programme in 2008-14.
The only continuing lender to Essar Global is now VTB, which has been working with Essar Global over the past three years to monetise certain assets, strategically lighten the balance sheet, deleverage the group and reposition it for growth in the future.
Commenting on the above, Prashant Ruia, Director-Essar Capital, said: “In 2008, Essar had commenced a massive Rs 1,20,000 crore investment programme across the sectors of energy, infrastructure, metals & mining, and services. Adverse regulatory and governmental actions—including cancellation of natural gas supply by the Government of India, and of coal mine allocations between 2010 and 2015, which were both unanticipated and outside of Essar’s control—affected some of Essar’s businesses. This resulted in a build-up of excessive leverage across the group, even as Essar committed to provide substantial infusion of new equity in its businesses.
Over the past two years we committed ourselves to a massive deleveraging programme and have repaid more than Rs 1,37,000 crore to our lenders, most of which will go to the Indian bankers and lenders.
The premium valuations being placed on the various assets that have been sold by Essar are testament to the quality of these assets and businesses we have built over the years.
With the deleveraging programme now drawing to a close, and with a much stronger and sustainable balance sheet, we look forward to repositioning ourselves for growth.”
