OVL Borrows USD 2.5 Bln to Finance Rovuma Stake Acquisition
ONGC Videsh Limited (OVL), the overseas arm of Oil and Natural Gas Corporation Limited (ONGC), 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% participating interest in Rovuma Area I Block in Mozambique offshore.
The first facility for a five year term amounting to USD 1.775 billion was signed with the consortium of reputed 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 1.0 billion through this long-term facility; however, decided later to upsize the same in view of overwhelming response from the 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 second facility is in the nature of a bridge finance of USD 725 million for a one year term with consortium of reputed international 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, the company had made its inaugural offshore USD bond offering of dual-tranche Reg-S notes in international markets aggregating USD 800 million to finance its 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% and 3.756% 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.
In January 2014, the company had raised USD 1.5 billion 1-year bridge loan facility from a consortium of 9 banks to finance the acquisition of participating interest of 6% in the Rovuma Area I Block in Mozambique offshore from Videocon.
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.
“We are extremely pleased with the strong enthusiasm shown by top global banks at extremely fine pricing leading to market defining transactions. In the backdrop of a volatile global economic environment, such interest is reflective of ONGC’s robust credit profile and underlines the strong India story,” said Sudhir Vasudeva, CMD, ONGC and Chairman, OVL.