OVL raises USD 2.5 bn in foreign loans to fund Mozambique buy

ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), has raised USD 2.5 billion in foreign loans to fund its acquisition of 10 per cent stake in a giant Mozambique gas field.
The company had in August last year bought US energy major Anadarko Corp's 10 per cent stake in the Mozambique gas field for USD 2.6 billion. The loan it has raised will fund that acquisition.
"OVL has entered into separate agreements with two consortiums of international banks to raise USD 2.5 billion by way of offshore borrowings to finance its acquisition of 10 per cent participating interest in Rovuma Area I Block in Mozambique offshore," the company said in a statement.

Prior to this, OVL had in June 2013 announced buying Videocon's 10 per cent stake in the same field, which may hold as much as 65 Trillion cubic feet (Tcf) of gas resources, along with Oil India Ltd (OIL) for USD 2.475 billion.
This stake was split between OVL and OIL in 60:40 ratio. To finance its 6 per cent buy, OVL in January raised USD 1.5 billion one-year bridge loan facility from a consortium of 9 banks.
OVL said its latest fund raising has been down through two separate consortium of international banks.

The first facility for a five-year term amounting to USD 1.775 billion was signed with consortium of international banks, including ANZ, Bank of Nova Scotia, BTMU, DBS, Mizuho, RBS, Societe Generale, SBI and SMBC.

The company had initially planned to raise USD 1 billion through this long-term facility. It, however, decided later to hike the same in view of overwhelming response from banks.
"SMBC took the leadership role in this facility with commitment of USD 700 million and acting as Facility and Escrow Agent. This is the single largest offshore 5-year loan facility arranged by an Indian company during the last three years," the statement said.
The second facility is in the nature of a bridge finance of USD 725 million for a one-year term with a consortium of banks including ANZ, BNP Paribas, BTMU, Citi, DBS, RBS and SBI. In this facility, Citi took the leadership with facility and escrow agency roles.

In April, 2013, OVL had made its inaugural offshore US dollar bond offering of dual-tranche Reg-S notes in international markets aggregating USD 800 million. This was to finance acquisition of participating interest in ACG field in Azerbaijan and the associated cross-country BTC pipeline.
The 5-year tranche of USD 300 million was priced at T+ 190 bps and the 10-year tranche of USD 500 million was priced at T+210 bps. The yields of these tranches were 2.574 per cent and 3.756 per cent respectively.
"The notes were issued at the lowest-ever coupon achieved by an Indian issuer in the 5-year and 10-year tenor in the USD bond market. This was also the largest-ever Reg-S only transaction by an Indian issuer in the USD bond market," the statement said.

With these three offshore loan facilities and the bond transaction, OVL has raised USD 4.8 billion from the international market in the current financial year.