Chennai-based Aban Offshore Ltd has planned to raise around Rs 4,300 crore. The drilling contract company aims to do so through qualified institutional placement (QIP), foreign currency convertible bonds (FCCBs) and global depository receipts (GDR).
A special resolution at the coming annual general meeting for the proposed QIP, of up to Rs 2,500 crore, comes with an enabling resolution for issue of equity shares, FCCBs, GDRs, ADRs (American depository receipts) and others for an amount not exceeding $400 million (Rs 1,800 crore), including an over-allotment option, from foreign markets through any securities.
“To increase the ability to compete with the peer group and to enhance global competitiveness...the company needs to strengthen the financial position by augmenting long-term resources,” it says. The proposed special resolution seeks enabling authorisation without need for any further approval from shareholders.
A note to shareholders from Reji Abraham, managing director, says: “In a capital-intensive business, economic management, debt procurement and timely interest repayment contributes immensely towards keeping up competitive advantage. We did well in this regard; made a net repayment of $230 mn during the course of the year, funded through accruals and debt refinancing. This helped reduce debt on the company’s books from a year-start of $3.1 billion to a year-end of $2.9 bn.”
The company operates in the domestic market and parts of Southeast and South Asia, Latin America and West Africa. It says it suffered an unexpected setback during the first quarter of the financial year, when Aban Pearl, one of its prized rigs, sank in Venezuelan waters, “an inexplicable natural mishap”.
“The submergence had two impacts on our balance: One, a loss in revenues of what we would have earned from Aban Pearl, which was grossing $286,000 a day in rentals at the time of the mishap; two, the deficit between what we had paid for Aban Pearl and what the company received from the insurance company, estimated at $74 million, while the deficit was written off from the profit and loss account of the financial year,” said the company. The proceeds of the cash inflow were utilised in the redemption of borrowings.