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Rs 11 bn international finance for Reliance Petroleum

Reliance Petroleum Limited on Thursday closed a syndicated project finance facility of Rs 11 billion (US $300 million) with a group of leading international banks.

According to a company release, the loan deal with final maturity of 10 years was struck at interest rate of 2 to 2.5 per cent over Libor (London interbank rate).

This is claimed to be the largest project finance loan by an Indian company from the international market without any guarantee from the government and financial institution.

The loan deal, arranged by a group of four banks -- ABN Amro, Bank of America, Bankers Trust, and Toronto Dominion -- has participation from more than 25 banks in Europe, Japan, North America, and Asia. Final allocations were expected to be scaled back substantially because of the large oversubscription, the release added.

This funding comes close on heels of Reliance Industries raising US $405 million (Rs 14.50 billion) from international investors in 72 hours during the past week, a record in Indian corporate history.

On July 22, 1997, Reliance Industries became the first manufacturing company in Asia to tap the sterling market by raising sterling 150 million ($255 million or Rs 9 billion) in 10-year debt, the highest tenor achieved by any Asian company.

The Reliance Industries sterling issue is also the largest single tranche debt offering from India. Less than 72 hours after that, Reliance Industries achieved yet another first by privately placing $150 million (Rs 5.5 billion) in debt with sophisticated European investors on July 24, 1997.

This represented the lowest cost borrowing for Reliance Industries at an attractive interest rate of 7.625 per cent. With these transactions, Reliance Industries has opened new debt markets, thus achieving further diversification of markets and investors. Reliance Industries already has bonds of 10, 12, 20, 30, 50 and 100 years outstanding in the US debt markets, thereby providing a benchmark yield curve for other Indian issues.

Reliance Petroleum is setting up the world's largest single stream grassroots refinery at Jamnagar with a capacity of 15 million tonnes per annum. The capital cost of the project is Rs 86.94 billion ($2.4 billion).

Reliance Industries, the sponsor of the refinery project, is the largest private sector company in India with total assets of Rs 195.36 billion ($5.4 billion), net worth of Rs 84.71 billion ($2.4 billion), sales of Rs 87.3 billion ($2.4 billion), and net profit of Rs 13.23 billion ($360 million).

UNI