FIs plan $ 104 mn bail-out for Essar

DECEMBER 8: The heads of financial institutions who are meeting here on Thursday are likely to consider a $ 104 million (around Rs 455 cro...

DECEMBER 8: The heads of financial institutions who are meeting here on Thursday are likely to consider a $ 104 million (around Rs 455 crore) loan package for the beleagured Essar Steel.

This loan package will be used for the “financial restructuring” of the company which recently defaulted on its $ 250 million FRN repayment obligations. “The package is likely to be an eight year loan with four-year moratorium. The Ruias will be the personal guarantors for the loan,” FI officials said.

It may be recalled that the financial institutions had declined to bail out the Essar group when it defaulted on the FRN repayment earlier this year. Subsequently, institutions changed their stand and decided to back the group. FIs, which had met last month, had already taken an in-principle decision to fund the repayment.

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Essar Steel has around Rs 4,600 crore borrowings. The company’s net worth had come down to Rs 1,736 following losses in the last year.

Essar Steel had already issued a notice to the FRN holders to exercise their option by December 20. The company is expected to complete the debt restructuring by the end of January. The company is expected to go ahead with the rights issue only after solving the FRN issue.

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