Cairn India Clinches $1.6B Financing for Rajasthan Project
Cairn India, which started production from the world class Mangala Field in Rajasthan on August 29, 2009 and delivered its first volumes of crude oil to MRPL on October 8, 2009 has achieved another major milestone.
Cairn India has completed financing arrangements for US $1.6 billion for funding its Rajasthan project. The borrowings are of a long term nature with tenure of six years. The proceeds from this facility will be used to repay the existing facility of US $850 million and to continue to fund the ongoing projects in Rajasthan. The financing has been arranged through a combination of US dollars and Indian rupee borrowing by accessing both domestic and international markets.
The international borrowing of US $750 million consists of a fully underwritten portion of US $500 million by Standard Chartered Bank and US $250 million loan by International Finance Corporation, a member of the World Bank Group. The domestic borrowing has been underwritten by the State Bank of India (SBI) for Rs.4,000 crore (~US $850 million). SBI Capital Markets Ltd acted as advisors to Cairn India for the domestic borrowing.
The resource base has continually grown since the discovery of Mangala in 2004 and the focus in the coming years will be to realise the full potential of the Barmer Basin. The Mangala, Bhagyam and Aishwariya fields together with their Enhanced Oil Recovery (EOR) potential are being developed in sequence and when complete MBA production is expected to rise to at least 175,000 barrels of oil per day.
Rahul Dhir, Managing Director and Chief Executive, Cairn India said, "We are delighted at the confidence shown by leading financial institutions, both in India as well as overseas, in our Rajasthan project and our business. The financing has been completed by accessing two diverse markets on competitive terms in these current challenging times.
"This is in line with our strategy of funding development expenditure through debt and realigning the company's capital structure to provide financial flexibility for the future.
"We stand committed to achieve our approved targets and deliver value to all our stakeholders."
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