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Aban Offshore plans to raise over Rs 4,500 crore through market instruments to repay debt

MUMBAI: Debt-laden offshore drilling and oil field service provider Aban OffshoreBSE 1.03 % is planning to raise more than 4,500 crore through various market instruments to replace a portion of its expensive debt.

Aban Offshore has a total debt of more than 13,000 crore and has been struggling to repay its debt.

The Reji Abraham-promoted company is now looking to raise 2,200 crore through issue of FCCBs and GDRs and is also looking to raise an additional 2,500 crore through issue of shares to qualified institutional buyers.

"We want to keep the approvals from the shareholders ready so that when we want we can go ahead with our plans to raise money when we need it. We are awaiting shareholder approval to raise additional long-term resources through issue of FCCBs, GDRs and ADRs for about $400 million and an issue of equity related securities to qualified institutional buyers for 2,500 crore," a senior official from Aban said.

Aban Offshore did not respond to an email questionnaire send by ET. The Chennai-based company has been struggling to stay afloat after the company incurred massive debt due to its acquisition of Norway-based Sinvest for which Aban had to pay more than 5,200 crore.

The acquisition was done at a time when the prices of vessels remained very high in the backdrop of a boom in a global economy. But the subsequent global financial collapse and a fall in the crude prices affected fortunes of offshore companies across the globe.

"Aban's balance sheet was dented largely due to the acquisition and a fall in crude oil also brought down the company's earnings during that period. Crude oil prices, which remained high until early 2008, fell drastically later and offshore companies incurred massive losses," a senior official from an oil and exploration company told ET.

Excess supply of vessels which were ordered during the boom time also brought down hiring charges.

Earlier this year, Aban had said it was looking to refinance close to 2,000 crore of its domestic borrowings. Aban Offshore, India's largest offshore drilling and oil field service provider, had also lost one of its rigs in an accident in Venezuela which affected its earnings.

Aban's market capitalisation has dropped by more than 100% since the acquisition and the market capitalisation currently stand at 1,300 crore. Aban currently has 18 assets which include 15 jack-up rigs. In a recent report by 
ICICI Direct, the research firm had said that the uncertainty over asset utilisation, declining charter rates and significant interest cost had impeded profit growth.