Offshore drilling contractor Aban Offshore Ltd is planning to restructure part of its $2.6 billion (around Rs 13,900 crore at the current currency rate) debt from Indian rupee loan to foreign currency loan, which would help it to reduce the interest rate, said a top management official from the company.
The company has around Rs 2,000 crore debt in Indian currency, which attracts an interest of around 13-14 per cent. A major share of this, around Rs 1,800 crore, is expected to be converted into dollar loans in next three to four months, said Reji Abraham, managing director, Aban Offshore Ltd.
“Convertion into foreign currency would help us to reduce the interest rates by 6-7 per cent. Further, our business is mostly in dollar terms and converting the rupee loan to foreign currency would help us to hedge the loans,” he said. The Indian Rupee loan accounts to around 15 per cent of the total debt of the company. The company is in talks with banks for the process, he added.
Meanwhile, the company has reduced the total debt burden from $2.8 billion last year to $2.6 billion this year and expects to reduce at least $200 million (around Rs 1,100 crore) every year for the next five years, he added.
Despite the embargo by US and European Union on Iran, the company expects the business from Iran to grow, since the political relation between India and Iran are currently good. Almost 40 per cent of the company's business comes from Iran and around seven rigs of the company is working in Iranian offshore sites at present, he added. For insurance, it could rely on insurers from non-European countries. The company is working on some arrangement in the payment from Iran for its services.
It is also open to any proposal to sell off some of its existing rigs to buy new ones, said Abraham. In the company's annual general meeting, he informed the shareholders that while an exact valuation of the company would be difficult to arrive at, the average price of of all the 18 assets the company holds could be at $3 billion. The company would use the asset to repay the debt.
The company requires to renew its older assets to meet the prevailing drilling practices and it is looking at upgrading or refurbishing the rigs, said P Murari, chairman, Aban Offshore Ltd. “The necessity of rejuvenating or renewing our older assets to meet the technological changes in accordance with the prevailing drilling practices is an important growth requirement. The company is currently addressing these issues keeping in view the cost aspects and financial ability,” he said.
