OIL plans to raise funds through a mix of foreign currency bonds and long-term external commercial borrowings to refinance the bridge loan. The source said OIL wants to raise up to USD 900 million through the issue of US dollar bonds.
State-owned Oil India Ltd plans to raise USD 900 million in foreign debt to refinance a loan taken to fund its share of a stake in a super-giant Mozambique gas field acquired jointly with ONGC .
Oil and Natural Gas Corp (ONGC) and Oil India (OIL), the nation's biggest state-run explorers, completed the USD 2.475 billion purchase of Videocon Industries ' 10 percent stake in the Rovuma-1 field in the waters off the African nation in January.
The stake was initially split 60:40 between ONGC Videsh Ltd (OVL), the overseas arm of ONGC, and OIL. Since OVL acquired an additional 10 percent in the field on its own, OIL got 1 percent more, thereby equally splitting Videocon's interest.
"OIL had arranged for a short-term bridge loan for one year of USD 1.3 billion to fund its share," a source with direct knowledge of the development said. Of this, USD 1.03 billion was utilised to acquire the initial 4 percent stake and the remainder will be used to buy the additional 1 per cent interest from OVL. The bridge loan is to be repaid within one year.
OIL plans to raise funds through a mix of foreign currency bonds and long-term external commercial borrowings to refinance the bridge loan. The source said OIL wants to raise up to USD 900 million through the issue of US dollar bonds. It has mandated Citi, Deutsche Bank, HSBC, RBS and Standard Chartered as the issue managers.
The borrowing will insulate the company from volatility in the rupee-dollar exchange rate. Raising debt overseas and paying for the acquisition in offshore accounts of the seller would insulate the deal from currency fluctuations, he said. The Rovuma-1 field holds 45 to 75 trillion cubic feet of gas reserves, which are proposed to be converted into liquid form (LNG) for export to nations including India.
"First gas is planned for end-2018," the source said. OIL shares ended at Rs 483.45 on the BSE, down 0.29 percent.
Oil India stock price
On April 07, 2014, Oil India closed at Rs 483.45, down Rs 1.4, or 0.29 percent. The 52-week high of the share was Rs 629.70 and the 52-week low was Rs 415.00.
The company's trailing 12-month (TTM) EPS was at Rs 52.90 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 9.14. The latest book value of the company is Rs 319.59 per share. At current value, the price-to-book value of the company is 1.51.
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