EXIM Bank $100m loan to refinance for on-lending to REC’s borrowers
Power company REC Limited has raised US$1.15 billion in August 2023 as part of Rs.1.20 lakh crore market borrowing programme for 2023-24, and has signed a Foreign Currency Term Loan Agreement for US$100 million with Export Import Bank of India (EXIM Bank).
The August loans are to fund power, infrastructure and logistics sector projects as permitted under the ECB guidelines of the Reserve Bank of India.
The loans have been tied up for a 5-year tenor and are benchmarked to Overnight SOFR (Secured Overnight Financing Rate), which is the benchmark rate for the loans denominated in USD.
The amount has been raised in two tranches from a consortium of six banks as the Mandated Lead Arrangers and Bookrunners (MLABs).
The Tranche 1 of US$505 million was raised from Bank of Baroda, Gujarat International Fin Tec-City (GIFT City) IFSC Banking Unit (IBU); Axis Bank, GIFT City IBU and State Bank of India, London Branch on 3 August 2023, while Tranche 2 of US$645 million was raised from State Bank of India, London Branch; Bank of India, GIFT City IBU; Bank of India, London Branch and HSBC, GIFT City IBU on 31 August 2023.
Both the tranches taken together saw an aggregate commitment of US$550 million from GIFT City IFSC Banking Units (IBUs). This is the highest ever commitment to REC from GIFT City IBUs in a single month, surpassing the earlier largest commitment of US$345 million in December 2021.
Commenting on the successful closure of the USD Term Loans, REC Chairman and Managing Director Vivek Kumar Dewangan said on 6 Sept, “REC has been actively looking for various innovative options to diversify its sources of borrowings to lower its cost of borrowings.
“The successful closure of these two transactions within a single month is a testimony to the strong financials of REC Ltd and continues to remain attractive to international lenders.
“We are pleased with the overwhelming response of Banks to these loans, which is also our largest single-month fund raising from GIFT City IBUs. This also reinforces REC’s positioning as the largest PSU borrower from the international markets during the current year.”
The US$100 million EXIM Bank loan will be used towards refinance for on-lending to REC’s borrowers in power, infrastructure and logistics sectors for importing capital equipment.
The loans are also part of REC’s Market Borrowing Programme of Rs. 1.20 lakh crore for the year 2023-24.
This is the first term loan being extended by EXIM Bank to REC. The loan has been tied up for a 5-year tenor and is benchmarked to SOFR (Secured Overnight Financing Rate), which is the benchmark rate for the loans denominated in USD.
Dewangan said, “We are delighted to partner with EXIM Bank of India to bridge the financing needs of power, infrastructure and logistics sectors.”
Chairing REC’s 54th AGM on 6 Sept, he said, “REC is committed to increase its present loan portfolio of Green Projects to the extent of more than ten times by the year 2030 amounting to Rs.3 lakh crore.
“REC has been known for its rural electrification efforts; now it would be known for its Renewable Energy (RE) focused initiatives including solar, wind, hybrid and e-mobility projects, as well as new areas like Green Hydrogen, Green Ammonia Projects, round the clock projects involving bundling of RE with thermal power and ethanol manufacturing.”
The CMD said that while reposing faith in REC, Ministry of Power has also allowed the company to lend to non-power infrastructure & logistics sectors to contribute to the accelerated development of the nation.
“I ecstatically report that during the first year itself, we have sanctioned more than Rs.85,700 crore towards various projects spanning Metro, Ports, Airports, Oil Refineries, Highways, Steel Infra to Healthcare, Educational Institutions and also in sectors of IT Infra/ Fiber Optics, etc. that constitute about 32% of overall sanctions of the Company, in the last financial year.”
Regarding bond issue and dividend, Dewangan informed, “In August 2022, the company issued bonus shares to shareholders in a 1:3 ratio, issuing 65,83,06,000 new fully paid-up equity shares of Rs.10/- each. This increased the issued and paid-up share capital to Rs.2,633.22 crore, comprising 2,63,32,24,000 equity shares of Rs.10/- each.
“In terms of dividends, REC is among the highest dividend-paying companies in its category. During FY23, the Board proposed a final dividend of Rs.4.35 per share for the approval of shareholders in this AGM and the same has been approved by the shareholders.”
This is in addition to the 1st Interim Dividend of Rs.5 per share and 2nd Interim Dividend of Rs.3.25 per share which has already been paid. The total dividend for the FY23, including the proposed final dividend, is Rs.12.60 per share. The total dividend pay-out for FY23, including the proposed final dividend, is Rs.3,318 crore.” Fiinews.com
