Essar Shipping Sells Convertible Bonds to Parent (Correct)
(Corrects tenor of bond in second paragraph.)
Essar Shipping Ports & Logistics Ltd., India’s second-largest marine transport company by market value, raised $280 million by selling convertible bonds to its parent to buy ships and expand ports.
The company sold a five-year bond for $150 million and a seven-year security for the remainder, Chief Financial Officer Shailesh Sawa said in Mumbai today. Essar Shipping & Logistics Ltd. purchased the bonds that can be converted into equity at 91.77 rupees apiece.
Essar Shipping Ports plans to add more vessels and expand its ports as demand for trade rises in India, the world’s third- fastest growing major economy. The company plans to boost investment in its port unit by 77 percent to $1.78 billion by 2013, it said in a presentation to investors in June.
First-quarter net income of the company gained six fold to 394.8 million rupees, it said in a statement to the Bombay Stock Exchange earlier today. The shares jumped 19 percent, the most in more than six years, to 108.70 rupees at close of trade in Mumbai today. The stock has gained 43 percent so far this year.
Essar Shipping Ports operates a fleet of 25 ships, including very large crude carriers and dry bulk carriers. It has another 12 ships on order, while two second hand dry bulk ships will join the fleet this month, Rajiv Agarwal, chief executive officer, said.
The parent company’s stake will increase to 86 percent from 83 percent if it opts to convert all the $280 million worth of bonds, Agarwal said. Buying the bonds was ‘the best route’ for the parent to infuse funds into the company, he said.
To contact the reporter on this story: Siddharth Philip in Mumbai at Sphilip3@bloomberg.net
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