Sources in the know told FE that the British gas giant has approached the International Finance Corporation (IFC) for raising a seven year revolving credit facility aggregating $40 million (approximately Rs 200 crore). The company is also in talks with a number of leading foreign and Indian commercial banks to raise short-term funds for investing in its exploration works. Cairn will use the funds to develop its assets in India spread across Andhra Pradesh, Gujarat and Rajasthan.
"Cairn is in the process of setting up a revolving unsecured credit facility with commercial banks and IFC. IFCs $40 million financing will be a seven year facility while the loans from commercial banks will have tenors ranging from one year to three years," according to an IFC notification. The multilateral lending agency will take a final decision on the Cairns proposal in its next director board meeting scheduled to be held early next month. "In all possibility, IFC will clear the credit line in its next meeting scheduled to be held on December 9, 2003."
Over the past few years, the company has stepped up its exploration and appraisal program in India, which has now started to yield results. Following this, the company is now in the process of developing its assets. The fund raised from IFC would be used to develop its gas and oil fields across India. Cairn Energy operates a number of oil and gas fields in India and Bangladesh. These include a couple of offshore fieds in Andhra Pradesh, Gujarat and Rajasthan. Around 96 per cent of the companys revenue comes from its India and Bangladesh operations. Cairn is largely owned by institutional investors and no single shareholder holds more than 15 per cent in the companys stock. The five largest shareholders of Cairn are Deutsche Asset Management (which holds 15 per cent), Fidelity Investments (13 per cent), ISIS AMC (9 per cent), Lazard Asset Management(6 per cent ) and Legal and General Investment and mgmt(4%).