Essar Energy raises $500 mn through bonds

Maturing in 2016,the bonds have been priced at a coupon rate of 4.25 per cent,the company said.

Essar Energy Plc on Wednesday said it has raised USD 500 million through a convertible bonds issue to fund acquisitions,projects and refinance debt.

Maturing in 2016,the bonds have been priced at a coupon rate of 4.25 per cent,the company said in a press statement here.

The bonds can be fully convertible into equity shares at a price of USD 11.0861,a premium of 30 per cent above the reference price of USD 8.5277 (being the volume weighted average price of the ordinary shares on the London Stock Exchange between launch and pricing).

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“The issue size may be increased by up to USD 50 million by way of an over-allotment option granted to the joint bookrunners of the offering,which is exercisable up to January 28,2011,” it said.

Based on the issue size of USD 500 million,the bonds to be issued represent about 45.1 million shares or 3.5 per cent of the current total number of issued and outstanding shares of the company.

The company intends to use the proceeds of the offering primarily to pursue acquisition opportunities in power,coal and,oil and gas assets.

Essar Global Ltd,the majority shareholder in Essar Energy,has entered into an equity swap transaction with Standard Chartered Bank.

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“Under the terms of the transaction,EGL will acquire an additional economic interest of USD 144.75 million in Essar Energy’s ordinary shares. The swap will last for the life of the Bonds and may be settled by EGL receiving cash or,at EGL’s option,shares,” the statement said.

The bonds were issued by the company’s wholly-owned subsidiary Essar Energy Investment Ltd and will be guaranteed by Essar Energy.

Deutsche Bank AG,London Branch,JP Morgan Securities Ltd and Standard Chartered Bank were the arrangers of the issue.