The cash-strapped Aban Offshore Ltd (Aban), the country?s largest offshore drilling service provider for the hydrocarbon sector in private sector, is likely to go for an equity float or an equity dilution to meet its debt repayment obligations in the near future, unless its rig Aban Abraham, which went off contract since April, get back to work soon.
Market sources said raising of money through the equity route may be a feasible option for the company unless its operating cash flow improves in the near-term. The company is also facing a negative cash flow from its joint venture, Venture Drilling, which owns the drillship Deep Drilling on a `bareboat’ charter. Aban also made a one-time write off on its books after its Norwegian JV Petrojack Drilling filed for bankruptcy. Brokerage house Prabhudas Lilladher in its latest report on the company said: ?Aban?s consolidated debt position as on September 30, 2010 stood at Rs 13,200 crore as against Rs 14,100 crore as on March 31, 2010. The repayments include $150 million repaid from the insurance claim amount of Aban Pearl. Further, we expect debt to reduce to Rs 11,900 crore by the end of FY ’11 based on repayment of Rs 1,680 crore which is due during the fiscal. For this, we expect equity issuance of Rs 5 billion (Rs 500 crore) during the course of the year?. Emkay has downgraded the full year earnings of Aban for the current fiscal following the delayed commencement of operation by Aban Abraham and the idle status of Deep Venture.
