Paradip refinery project achieves financial closure

A consortium of 21 lenders led by the State Bank of India (SBI) today committed a Rupee Term Loan of Rs 14900 crores to Indian Oil Corporation Ltd (IOCL) for its 15 million tonnes per annum grassroots refinery project being implemented at Paradip in Orissa.

The execution of loan agreements was concluded here, a press release from SBI Capital Markets Ltd (SBICAPS), which acted as the sole adviser and arranger for this deal, said.

The term loan facility having a door-to-door tenor of 14 years has been tied up through a consortium of 19 Public Sector Banks and 2 Financial Institutions---Life Insurance Corporation and Housing and Urban Development Corporation (HUDCO), it said.

This transaction, which is the largest syndicated rupee term loans arranged in Indian debt markets for a single project, comes at a time when both global and domestic economies have started witnessing signs of revival.

The project envisages a total outlay of Rs 33504 crores, which is proposed to be funded by a combination of debt (Rupee & Foreign Currency Loans) and equity (internal accruals). The present financing pertains to the domestic component of the capital expenditure.

SBICAPS has structured the facility to pass on the benefits of declining interest rate to the borrower during its entire tenor of 14 years. The other key features of the transaction include a "Ring Fenced" Project Finance deal which ensures that the other borrowing programmes of IOCL are least affected and at the same time the lenders derive comfort from the IOCL balance sheet. The project is likely to be commissioned by early 2012, the release added.

NNN