Aban Offshore expects to reduce debt by $200 mn this fiscal

Company has also converted major share of its rupee loans to foreign currency loans to save interest costs

Offshore drilling services provider Aban Offshore Ltd is planning to reduce its debt by $200 million in the current fiscal, as part of its efforts to reduce its overall debt burden of $2.5 billion.

The company has also converted a major share of its Rupee loans to foreign currency loans to save the interest costs.

Speaking in the sidelines of the company's annual general meeting held here, Reji Abraham, managing director of Aban Offshore Ltd said, “We have reduced debt by $150 million last year. Currently we have a debt of $2.5 billion and our expectation is to reduce another $200 million this year”.

The debt was taken on the company's books to mobilise adequate resources that would enable the company to capitalise on fleet asset-acquisition opportunities and it was possible because the regulations and the banking policies were much favourable at that period, he told share holders earlier.

Last year, the company said that it has plans to reduce at least $200 million (around Rs 1100 crore) every year for the next five years. He said that the debt was created with an assumption to repay it in long term, in around 10-15 years' time.

During the fiscal year 2012-13, the company has also converted a major share of its rupee loans to foreign currency loans, he added. It has converted loan of almost Rs 1,500 crore into foreign currency loans.

It would continue to convert the Rupee loan and making almost 98% of the debt in foreign currency. Last year, he said that the company has a Rupee loan of Rs 2,000 crore.

Conversion into foreign currency would help it to reduce the interest rates by 6-7%, while the interest rate for Rupee loans were at around 12-14%. Further, the company's business is mostly in Dollar terms and converting the Rupee loan to foreign currency would help it to hedge the loans.

The company, which has 18 rigs in its asset porfolio has all rigs except one in Brazil deployed under long-term contracts during the financial year 2012-13. This near-complete asset deployment would help the company towards restoring its growth and profitability, says the company's annual report.

While last year the company said that it would look at replacing some of its old rigs, with all the rigs being deployed currently under three year and five year contracts, there are no plans for sale of rigs as of now, said Abraham.

Replying to a query on the political situation in  Wes Asia and the risk involved for Aban's rigs in the region, he said that the company has seven rigs working in the region and there are only repayment issues with the rigs in Iran, considering the economic sanction by the US government.

While usually the payments has to come in 45 days from the issuance of invoice, there is a delay of three to four months. The company is tracking the issue with the Government of India to bring in a solution.

The opportunities for business in the  Wes Asia nations like Oman, Saudi Arabia and Kuwait are increasing, he added.