Essar Ports to refinance $ 600-million debt - Essar | Creating Value Essar Ports to refinance $ 600-million debt - Essar

Essar Ports to refinance $ 600-million debt

The company is not looking at more borrowings this year as it would spend Rs. 400-500 crore from internal accruals to expand capacities across its portfolio.

The Financial Express

May 2nd, 2018

Essar Ports is planning to refinance $600 million of bank borrowings to lower its cost of funds to 8-8.5% from 11% at present. Essar Ports CEO and MD Rajiv Agarwal said, “In each of our four assets — Hazira, Salaya, Paradip and Visakhapatnam — there is a consortium of lenders. We are aiming to complete our refinancing programme in the next six months.” Agarwal added that the company is not looking at more borrowings this year as it would spend Rs.400-500 crore from internal accruals to expand capacities across its portfolio, primarily in Hazira.

Among the company’s current lenders are Punjab National Bank, UCO Bank and Yes Bank. The company does not expect an adverse impact on its cargo volumes in case its flagship group Essar Steel is acquired by any of the potential suitors. Essar Steel contributes 80% to the cargo volumes at Hazira and just over 50% to cargo volumes at Paradip and Visakhapatnam.

Agarwal said, “Volumes will remain robust because it is not a factor of who comes but more a factor of how the industry is doing; and the industry is doing well, not only in terms of demand but also in terms of pricing. We expect that whoever acquires Essar Steel, our volumes are going to go up. In fact, they may go up faster because after this process, the acquirer will want to ramp up capacity for the steel plant at Hazira, which will mean more cargo will be handled by us.”

ArcelorMittal SA, Vedanta Resources and Numetal, a consortium led by Russia’s VTB, are in the fray to acquire Essar Steel. Essar Ports operates four assets, one each at Hazira and Salaya on the west coast, and at Visakhapatnam and Paradip on the east coast. It is aiming to increase its total capacity to 110 million tonnes in the current year from 90 million tonnes at the end of FY18.

Source: The Financial Express ​