Petronet in debt syndication agreement, to float bonds

Petronet LNG Ltd (PLL) signed debt syndication agreements with a consortium of banks and a financial institution for all the rupee term loans of the company in Mumbai on Wednesday.

PLL had on Monday commercially commissioned the country's first liquefied natural gas (LNG) terminal at Dahej in Gujarat.

P Dasgupta, director (finance) of PLL, who signed the agreements with 13 banks and the Infrastructure Development Finance Corporation (IDFC), said, "We signed four major agreements today with a consortium of banks led by the State Bank of India for all the rupee term loans and closed the company's debt syndication. The agreements cover the term loan of Rs 1,804 crore and a working capital facility agreement of Rs 180.9 crore. This is apart from the letters of credit of $107.6 million for LNG and $16.53 million for the LNG-carrying vessel."

The banks in the consortium are Punjab National Bank, State Bank of Hyderabad, State Bank of Indore, State Bank of Patiala, Syndicate Bank, Canara Bank, Federal Bank, Indian Overseas Bank, Oriental Bank of Commerce, ICICI Bank, Jammu & Kashmir Bank, Allahabad Bank and the State Bank of India.

Against a debt requirement of Rs 1,800 crore, Petronet had earlier received approvals from a syndicate of lenders for around Rs 3,000 crore.

Petronet started the project with short-term loans of Rs 1,400 crore, which have been extended from time to time, thereby reducing the project cost and now the same are being replaced by long-term funds. Petronet got its debt syndication done at 175 basis points below State Bank of India's medium-term lending rate and the lending rate has now been fixed at 9 per cent.

"The interest rate would be reset every third year and it will be linked to the three-year government security yield, which is at 4.7 per cent currently. In effect, it means Petronet will get finance at 8-9 per cent interest rate," Dasgupta said.

Petronet will come out with an initial public offering to mop up Rs 200 crore at Rs 18 per share on February 19. The float represents 25 per cent of the equity.

Petronet officials said the company will also float bonds that are partially guaranteed by the Asian Development Bank in May to raise Rs 525 crore. The bonds are expected to carry a coupon of 6.25 per cent.

"The proceeds will be used to repay the project term loan of Rs 1,804 crore syndicated today and will result in a further reduction of the average borrowing cost by another half per cent. We are likely to float the bonds in the last half of May or early June," Dasgupta said.