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Essar pares down debt via fire sale

Debt-ridden multi-sector conglomerate Essar Group has managed to retire around Rs 75,000 crore worth of debt by using the proceeds of the sale of its refinery and BPO businesses.

Published: 28th November 2017 08:01 AM  |   Last Updated: 28th November 2017 08:01 AM   |  A+A-

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By Express News Service

NEW DELHI: Debt-ridden multi-sector conglomerate Essar Group has managed to retire around Rs 75,000 crore worth of debt by using the proceeds of the sale of its refinery and BPO businesses. The company, which closed the Rs 2,000 crore sale of BPO arm Aegis on Monday, completed the sale of its refinery business to Russian oil giant Rosneft in August this year. 

“The closure of this transaction (Aegis) is in line with Essar’s intent to reduce leverage that is complemented by an asset monetisation programme. The proceeds from the sale of Aegis and Essar Oil have enabled Essar to retire almost Rs 75,000 crore of debt,” said the Essar statement. Earlier forecasts from analysts had speculated that Essar would have been able to pare some Rs 70,000 crore of its estimated `1.38 crore debt burden through the $12.9 billion sale of its refineries to Rosneft. 

Aside from providing a larger snapshot of its debt position, the company stated that the conclusion of the Rs 2,000 crore sale of Aegis to Capital Square Partners (CSP) marks its exit from the business process outsourcing (BPO) segment. The Aegis sale was announced on this April 3 and involved AGC Holdings Mauritius, a wholly-owned portfolio company of Essar Global, selling 100 per cent stake in ESM Holdings Mauritius, the holding company of Aegis, to CSP, a Singapore-based private equity fund.
The group has been in a drawn-out process of asset sales in order to bring debt down to manageable levels. So far, it has exited the realty, refineries and BPO segments. 

The group’s statement on reducing debt comes in the wake of the government’s ordinance making it impossible for defaulting promoters to bid for assets under bankruptcy proceedings without settling debt. With Essar Steel among the first companies going through the process under the new Insolvency and Bankruptcy Code, the quantum of debt remaining on the Group’s books is likely to prevent the Ruia family (promoters of Essar) from making eligible bids for their group’s revenue machine.

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