Essar to borrow $5 bn overseas to fund expansion

Essar to borrow $5 bn overseas to fund expansion
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First Published: Wed, Jun 06 2007. 03 49 PM IST
Updated: Wed, Jun 06 2007. 03 49 PM IST
PTI
New Delhi: The Essar group is in talks with international bankers to raise about $5 billion (Rs20,000 crore) by leveraging its 33% stake in Hutch-Essar, the country’s fourth-largest mobile player in which UK’s Vodafone has acquired majority stake.
The borrowing would be made by Essar Global, the overseas arm of Essar Group, and the funds would be used for financing the recent acquisitions of steel plants in Trinidad and Tobago, Canada, US and building power plants.
Essar Group, through its domestic companies and global subsidiary, may require about $8 billion (Rs32,000 crore) to fund the acquisitions and expansion into power sector, sources in the know of the development said.
When contacted, an Essar spokesperson declined to comment on company’s plans to raise funds.
Essar owns 33% in Hutch-Essar, in which Vodafone bought the stake of Hutchison Telecom International for $10.9 billion. Essar had negotiated with Vodafone to sell its stake to Vodafone for up to $5 billion, subject to regulatory approvals.
“Essar will have certain liquidity rights including, between the third and fourth anniversary of completion, and subject to regulatory requirements, an option to sell its 33% stake in Vodafone-Essar to Vodafone for $5 billion,” the two companies had recently said.
On this basis, Essar is negotiating a lower rate of interest for raising up to $5 billion from overseas market, the sources said.
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First Published: Wed, Jun 06 2007. 03 49 PM IST
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