State-owned Indian Oil Corp (IOC) Tuesday said it will raise $900 million through an overseas bonds issue to meet its working capital requirements. In a regulatory filing, IOC said it has launched an international bonds issue of $900 million, carrying a coupon of 4.75 percent.
The Notes are expected to be settled by January 16, 2019.
"The Notes carry a coupon of 4.75 percent per annum payable semi-annually. The Notes will mature in 2024 and all the principal and interest payments will be made in US Dollars," it said.
IOC said the proceeds of the issue will be used to fund working capital requirements for the normal course of business.
The bonds will be listed on the Singapore Exchange.
Bookrunners for the issue are Citigroup, DBS Bank, SBICAP Securities, Standard Chartered Bank and Westpac Banking.
IOC is buying back shares and is paying an interim dividend for the fiscal 2018-19, aggregating to Rs 11,000 crore.
The board of IOC last month approved buyback of up to 29.76 crore equity shares, or 3.06 per cent of share capital, at Rs 149 per share aggregating to Rs 4,435 crore. It also approved payment of Rs 6,556 crore as interim dividend to shareholders.
Fitch Ratings had last month stated that Rs 4,435 crore share buyback and Rs 6.75 per share interim dividend, together with funding requirements for IOC's capex plans to upgrade refineries for new emission standards and expansion of refining and petrochemical capacity, will drive up the company's leverage.
Its expected capex of Rs 23,000 crore in FY2018-19 and Rs 27,500 crore in FY2019-20 to result in continued negative free cash flow.
The government is pushing cash-rich PSUs to pay higher dividends and buy back shares using their reserves so as to help meet its budget deficit.
The government, which holds a 54.06 percent stake in IOC, is expected to participate in the share buyback.
Besides IOC, at least half a dozen other central PSUs have disclosed share buyback programmes. Prominent among these include ONGC, NHPC, Coal India, Oil India Ltd, BHEL, NALCO, NLC, Cochin Shipyard and KIOCL that could fetch the government a little over Rs 6,000 crore.
At the Rs 149 per share, the government is likely to get about Rs 2,400 crore by tendering some of its shares in IOC in the buyback.
Besides, out of the total dividend payout of Rs 6,556 crore, the government is expected to get Rs 3,544 crore plus the dividend distribution tax.
The Department of Investment and Public Asset Management (DIPAM), which has been set a target to raise Rs 80,000 crore for the government through stake sale in central public sector enterprises, had prodded all cash-rich PSUs to go for share buybacks.
PSUs having a net worth of at least Rs 2,000 crore and a cash balance of more than Rs 1,000 crore have to mandatorily go in for share buyback.
First Published: Jan 15, 2019 6:28 PM IST
