UK Credit

Essar Oil UK comes out of the woods and organizes $ 850 million loan



Clouds of financial problems are moving away from Essar Oil UK. He leveraged over $ 850 million in funds from various sources to replace the previous loan and access additional capital. The Ruia family-controlled refining company is believed to have received primary funding from Apollo Global Management and a few other banks.

The $ 850 million financing includes bilateral agreements with many of the refiner’s key customers on improved payment terms and other long-term finance, primarily related to crude supply.

The company will have to repay more than $ 500 million on the credit raised against the receivables of Lloyds Bank. The UK lender had stopped acting as Essar’s main banker after the company ran into financial problems due to disruption caused by a pandemic.

The company, which owns and operates the 2 lakh per day (b / d) Stanlow refinery, said it was working to transition the refinery to a “low carbon energy supplier.” It is building two blue hydrogen production centers at Stanlow, which will attract $ 1.06 billion in investment, the company said.

Prashant Ruia, chairman of Essar Oil UK, said the company has entered a positive and gradual phase with the economic recovery in the UK. “We look forward to continuing to invest in exciting new technologies, securing high-tech jobs and the future of Stanlow at the heart of the UK’s green revolution,” he added.

According to management, sales of Essar Oil UK’s products have improved with the easing of foreclosure restrictions in the country. The oil refiner expects to generate positive earnings before interest, taxes, depreciation and amortization (EBITDA) of $ 40 million in the current quarter. By comparison, it had negative EBITDA of $ 18 million in the corresponding quarter of 2020. It generated EBITDA of $ 300 million before the pandemic.

The company also expects benefits from the expected recovery in aviation fuel demand in the coming months. It also plans to close additional funding by June, in addition to implementing operational cost reduction initiatives during the year to further improve the situation.

Essar Oil UK operates the Stanlow refinery located on the south side of the Mersey Estuary near Liverpool. It produces 16 percent of UK road fuels and processes 10 million tonnes of crude and raw materials per year.

Since acquiring the Stanlow refinery in 2011, Essar has claimed to have invested $ 1 billion in the company. The refinery is currently the main activity of the Ruia family.

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