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Financial Appraisal & Debt Syndication for Gorakhpur, Sindri and Barauni Urea Project

Hindustan Urvarak and Rasayan Limited

Financial Appraisal & Debt Syndication for Gorakhpur, Sindri and Barauni Urea Project

2019

Details of the Transaction (Including unique traits, if any)

Deal: Debt Syndication of INR 15,819.53 Crore for HURL’s Gorakhpur, Sindri and Barauni Urea Projects.

The Asset Triple A Asia Infrastructure Country Deals Awards (South Asia) 2019 – Petrochemical Deal of the Year

Description: Hindustan Urvarak and Rasayan Limited is a Joint Venture (JV) Company of NTPC Limited, Indian Oil Corporation Limited, Coal India Limited, Fertilizer Corporation of India Limited and Hindustan Fertilizer Corporation Ltd

  • Gorakhpur Urea Project total Project Cost of Rs. 7,085.77 Crore funded at a Debt-Equity Ratio of 75:25 i.e. Debt of Rs. 5,314.33 Crore and Equity of Rs. 1,771.44 Crore. The entire debt requirement of Rs 5,314.33 Crore tied up through Rupee Term Loan (RTL) with a consortium of seven Indian Banks with State Bank of India as Lead Bank in 2018.
  • Sindri Urea Project total Project Cost of Rs. 6,977.01 Crore funded at a Debt-Equity Ratio of 75:25 i.e. Debt of Rs. 5,232.76 Crore and Equity of Rs. 1,744.25 Crore. The entire debt requirement of Rs 5,232.76 Crore tied up through Rupee Term Loan (RTL) with a consortium of six Indian Banks with State Bank of India as Lead Bank in 2018.
  • Barauni Urea Project total Project Cost of Rs. 7,043.26 Crore funded at a Debt-Equity Ratio of 75:25 i.e. Debt of Rs. 5,282.44 Crore and Equity of Rs. 1,760.82 Crore. The entire debt requirement of Rs 5,282.44 Crore tied up through Rupee Term Loan (RTL) with a consortium of six Indian Banks with State Bank of India as Lead Bank in 2018.

 

SBICAPS role

SBICAPS has been engaged for Financial services encompassing wide range of activities viz development of Financing plan and Project Debt Term Sheet, Development of Financial model, Preparation of Financial Appraisal report, Risk analysis and Mitigation Strategies, preparation of Financial Information Memorandum, Shortlisting and approaching lenders with the Term Loan proposal, making presentations to the Credit team of various Banks, Syndicating total required Project  Loan, assisting the Borrower in the Facility documentation.

SBICAPS was associated with the company throughout the transaction, right from financial appraisal and identifying / addressing the various risks from the developer’s as well as the financier’s point of view to structuring the deal and till financial close.

 

Key Learnings

  1. Arranging Project Debt with tenors beyond the Present Urea Policy period  Arranging Project Debt with tenors beyond period of 8 years (for which Company will receive reimbursement linked to Natural gas prices) from the date of SCOD available under Present Urea Policy was a key challenge. Lender’s risk perception mitigated by incorporating in the Loan Documents provision for Debt Service Reserve Account equivalent to 90 days of Debt Service.
  2. Project Finance of three projects in One Company at the same time.

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