Banks okay Rs 2,500-crore funding
Published: 05th January 2011 09:21 AM |
Banks have agreed to fund the Rs 2,500-crore Phase I of the Vizhinjam multi-purpose seaport project. A consortium of banks led by State Bank of Travancore (SBT), with whom the State Government was in talks, has waved the proposal forward. The structure of borrowing also has been finalised, top ports officials said.
The consortium will fund the project through a mix of term loans and institutional bonds. The borrowing will be spread over 12 to 15 years at an interest rate of nine to 9.5 percent, Ports Secretary Sanjeev Kaushik said. The agreement came at a meeting Kaushik had with banks at the headquarters of SBI Capital Markets Ltd in Mumbai last week to finalise the structure of borrowing.
‘’Our next step will be to place the proposal before the board of the Vizhinjam International Seaport Ltd (VISL) for approval,’’ Kaushik, who is CEO of VISL, said. The board will meet on January 10.
Other financial agencies such as LIC, HUDCO and Darashaw Securities also have agreed to raise between Rs 750 crore and Rs 1,000 crore. Credit rating agencies Care, Brickwork and ICRA, with whom also discussions were held last week, will rate the bond issue, Kaushik said. ‘’We have prepared the draft information memo on it,’’ he said. Once the VISL board approves the proposal of the banks, the State Government will convene a bankers’ meeting in Thiruvananthapuram to conclude the deal.
It was on November 16 that the Cabinet had given its approval to avail loans from nationalised banks and other financial institutions. Member banks in the consortium include State Bank of India, Dhanlaxmi Bank, South Indian Bank, Federal Bank, Canara Bank, Punjab National Bank and a number of other financial institutions. SBI Capital Markets is functioning as loan arranger. In the first phase, a three-kilometre breakwater and a quay 650 metres long are to be constructed. The breakwater alone will cost Rs 1,000 crore.
This month, the State Government will ink an agreement with Rail Vikas Nigam Ltd (RVNL) for laying railway tracks from the project site to the main line at Balaramapuram, a distance of ten kilometres. On January 10, the Ministry of Environment and Forests will discuss the draft Terms of Reference of the environment and social impact assessment planned for the port.