Essar group has cleared 80% of debt, says Ruia - Essar | Creating Value

Essar group has cleared 80% of debt, says Ruia

The Times of India

Jan 8th, 2019

Essar Global Fund, the holding company of the $11.5-billion Essar Group, on Monday said it has repaid Rs 12,000 crore ($1.75 billion) — the last tranche of its debt — as part of its strategy to de-leverage its balance sheet.

The latest debt settlement comes 17 months after the company repaid Rs 30,000 crore ($5 billion) to various lenders. In 2017, it sold Essar Oil to the Rosneft- Trafigura consortium for Rs 86,000 crore ($12.9 billion). Almost all the sale proceeds were used to settle Essar’s liabilities.

In 2008, the group had commenced a Rs 1.20-lakhcrore investment programme across its businesses. However, adverse legal and government actions, including cancellation of natural gas supply and coal mine allocations between 2010 and 2015, affected some of the group’s businesses.

These actions, according to the group, were unanticipated and outside its control, leading to financial difficulties. Under the deleveraging programme that was started two years ago, the group has repaid more than Rs 1.37 lakh crore ($21 billion) to lenders, paring over 80% of its total debt, Prashant Ruia, group director, said.

The only continuing lender to Essar Global is Russia’s VTB. The two have been working together over the past three years to monetise certain assets, lighten Essar Global’s balance sheet and reposition it for future growth.

The company now intends to sharpen its focus on existing businesses like infrastructure, shipping and ports.

Monday’s announcement comes at a time when group company Essar Steel is undergoing bankruptcy proceedings at NCLT and the Ruia family is trying to retain it by offering to clear the entire Rs 54,389-crore debt. Their offer beats Arcelor Mittal’s Rs 42,000-crore proposal. On Monday, the tribunal directed Essar Steel creditors and Arcelor Mittal to make their submissions within a week. The NCLT is expected to pass the order on Ruias’ maintainability offer before January 31.