Essar Power raises Rs 750 cr via rupee bonds

Essar Power today raised Rs 750 crore in debt via Rupee denominated bond offering. The 11-year bond   second tranche of bond raising by the power generator, has a target to raise as much as Rs 5,000 crore, which will be used to retire its existing debt.  

While the company refused to comment on the number of banks that have participated in the bond raising, the coupon rate is known to be around Rs 12.5%. The company had already raised  Rs 629 crore in its first tranche,  two months back.

The company has a total debt of around Rs 16,500 crore. “The proceeds will be used to make repayments on existing loan facilities within the power business, particularly relating to its new coal fired power projects,” the company said, in a press release.  

Essar Power is a part of the London-listed Essar Energy. It  has a total generation capacity of 3,910 megawatts and is working on projects which would increase its capacity to 6,700 megawatts. However, reduction in coal supply to two of its power plants in Mahaan and Salaya, affected their capacity utilisations or plant load factors (PLFs).

As the earnings are low are lower than expected as a result, extending the debt maturity period via re-financing will help the company in the long-term. “This bond issue will allow our power business to benefit from longer debt maturity timeframes and lower interest rates compared to our existing debt facilities. Essar Energy is well positioned to capitalise on the growing demand for power in India,” said Deepak Maheshwari, Essar Energy chief financial officer.

 
The new bonds issued will be listed on the Bombay Stock Exchange and will be repaid between 2022 to 2024. “However, it is currently intended that this bond issue will be refinanced with a Rs 3,000 crore credit enhanced Rupee bond issue in due course,” said Essar Power. For its Rs 5,000 crore Rupee denominated bond issue, it was assigned a credit rating of A+ by rating agency Credit Analysis and Research Ltd.