A day after announcing the stake buy of Videocon Industries' 10 per cent share in Mozambique's Rovuma Area 1 gas field along with ONGC Videsh ltd (OVl), Oil India ltd (OIl) has said that it will raise around $900 million through foreign debt for financing its own share in the $2.5 billion acquisition.
The stake will be split 60:40 between OVl and OIl as per the arrangement between the two state-owned entities. "We plan to go to overseas market to raise 80 to 90 per cent of our share of $1 billion (in the acquisition)," OIl Director (Finance) T K Ananth Kumar told media persons during an interaction to share the details of the acquisition on Wednesday.
The borrowing, which will insulate the company from the volatility in the rupee-dollar exchange rate, would be a combination of external commercial borrowings and US dollar bond issue.
With rupee plummeting to a record low of 60.76 to a US dollar, outward remittance will cost more for companies. Raising debt overseas and paying for the acquisition in offshore accounts of the seller would insulate the deal from the currency fluctuations.
"The currency variation will only have a marginal impact... To the extent of 10 per cent of the deal size that we have to pay from our reserves," he said.