Cairn India ties up $1.6 bn to repay debt, fund Raj project

Cairn India today said it has tied up $ 1.6 billion funds from domestic and overseas lenders to repay old debt and to accelerate the Rajasthan project where crude oil production started a few weeks back.

"The proceeds will be used to repay the existing (loan) of $850 million and to continue to fund the ongoing projects in Rajasthan," Cairn CFO Indrajit Banerjee told PTI here.

Cairn has borrowed $750 million in dollar loans and Rs 4,000 crore (about $850 million) in rupee loan. The international borrowing consists of a fully underwritten portion of $500 million by Standard Chartered Bank, UK and $250 million loan by International Finance Corp, a member of the World Bank Group. The domestic borrowing has been underwritten by State Bank of India.

A fully underwritten loan means the lending banks are free to invite other financial institutions or banks to join the facility, Banerjee said adding that Standard Chartered and SBI have underwritten the foreign and domestic loan portions, respectively.

"This is a very innovative financing where we relied upon liquidity in two distant and diverse markets, that is of UK and India," he said. "In the continuing uncertain environment, new commitment from foreign banks underscores their confidence in India... The ability of Indian banks to do such a large deal highlights the stability and depth of the Indian banks."