Essar Communications (India) Ltd, (EICL) a wholly owned subsidiary of Essar Global Ltd, has chosen four international banks to raise a loan of $3.59 billion (nearly Rs14,288 crore) to refinance debt and fund ambitious investment and expansion plans of the Mumbai-based group.

The loan will be raised against the Essar group’s 33% stake in Vodafone Essar Ltd, the new name for mobile phone

Financial rejig: Ravi Ruia, vice-chairman of Essar Group.

“The loan will help ECIL monetize the liquidity rights agreed between Vodafone Group Plc. and Essar as part of Vodafone’s acquisition of controlling interests in India’s fourth largest cellular business Hutchinson Essar Ltd," Essar Communications said in a statement.

The company did not provide the amount of existing debt that it wished to refinance with the new loan.

The Essar group, promoted by the Ruia business family, will pay an interest of 0.9% over London Interbank Offered Rate (Libor) on the loan. The loan has a maturity date of 8 December 2011.

Essar Communications has mandated BNP Paribas, Citigroup Global Markets Ltd, Commerzbank AG and Standard Chartered Bank Plc. to arrange a fully underwritten $3.5 billion term loan on their behalf.

Standard Chartered has underwritten 35% of the total loan amount, Commerzbank has committed 25%, while BNP Paribas and Citigroup have underwritten 20% each.

The Essar group is seeking loan from a group of banks with whom Vodafone and Essar already have business relationships, in addition to new lenders. Vodafone and Essar will hold a presentation in London for the short-listed banks on 28 September, the statement said.

Essar, a diversified group with business interests in oil to steel, telecoms to back-office services, bought Minnesota Steel Industries Llc. for $100 million with plans to invest $1.65 billion in an integrated steel facility.