Aban to bring down debt by 50% in 5 yrs

Aban Offshore plans to halve its present $2.7-billion debt over the next five years, India’s largest offshore drilling contractor in the private sector said today.

The company also said the recent trend of rupee weakening against the US dollar will not hit its prospects, since the 1986-founded firm’s payout and earnings are in the American currency. So it has a natural edge, according to company’s Managing Director Reji Abraham.

Speaking at the sidelines of the firm’s annual general meeting here, Abraham said Aban’s debt has come down from to $2.7 billion from $2.9 billion starting of the current fiscal. “From now, every year we have decided to repay around Rs 1,200 crore to Rs 1,300 crore. This will bring down our debt burden by 50 per cent in the next five years,” he said. “This will be paid out of our operating cash flow, which was around Rs 1,700 crore last year.”

Of the total debt of $2.7 billion, as much as $2.2 billion are in terms of dollar.

On whether the company will have an impact on the rupee weaking against the dollar, Abraham said, a majority of his company’s assets (rigs) were placed outside India.

“The earnings are in US dollar. Our payout is in the same currency. Thus we will not have any impact.”

The company at the AGM took shareholders’ nod to raise around Rs 2,500 crore by way of QIP/QIB and another $450 million by way of FCCBs/GDRs and other modes. “These are enabling resolutions,” he noted. “Whenever the market looks attractive, we will raise the money. This also helps us to be part of the debt and also take care of the future capex.”

Aban Offshore is planning to re-energise its wind farm, by roping in a wind farm developer as a partner. The company has 1100 acres of land in Tamil Nadu’s deep-south Kanyakumari district. “We are in talks with major wind companies, who will come as an investor, while we will be a land owners,” its managing director Reji Abraham said.

The company currently has 18 rigs. Of them, nine are old and are aged around 30 years. “If we get a good offer, we may consider selling it off. In that case, it will also be used to repay our debt.”

Aban had a two-year debt repayment holiday. It is from the current fiscal that they have to repay loans.

New rigs acquisitions are not planned for now, said Abraham. However, “if Yards gives us a good financial package, with a long-time moratorium, then we will consider it.”