Aban seeks shareholders’ nod to sell assets to slash debt

By: |
March 9, 2021 1:00 AM

The Chennai-based offshore drilling contractor, which has been in a financial mess for quite some time, will seek shareholders' approval to divest the assets at an emergency general body meeting (EGM) on March 29.

Aban has also identified rigs named Drill-ship Aban Abraham, jack-up rigs Aban VII and Deep Driller 3 for sale from the possession of its subsidiaries. The company has 20 subsidiaries in India and abroad.

Debt-ridden Aban Offshore is planning to sell some of its rigs and subsidiaries along with a floating production unit in a bid to repay the dues towards a clutch of banks and financial institutions.

The Chennai-based offshore drilling contractor, which has been in a financial mess for quite some time, will seek shareholders’ approval to divest the assets at an emergency general body meeting (EGM) on March 29. The company has identified jack-up rigs Aban V, Aban VI, Drill-ship Aban Ice and the floating production unit, Tahara, to be put on the block to raise funds.

Aban has also identified rigs named Drill-ship Aban Abraham, jack-up rigs Aban VII and Deep Driller 3 for sale from the possession of its subsidiaries. The company has 20 subsidiaries in India and abroad.

Aban has a debt burden to the tune of $ 2.3 billion on its books and has been in the talks with bankers to find a resolution plan to settle the dues. The decision to sell the assets was taken after the discussion between the company and the consortium of lenders, led by the State Bank of India.

The company had sunk into deep trouble with the auditors flagging off concerns on the firm’s continuation as a going concern. They pointed out that the current liabilities exceeded current assets and it has defaulted in respect of instalments and payment of interest on term loans and dues on account of cash credits from banks. These indicate that the material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern, the auditors had said.

It had reported a net loss of `4,457 crore in FY20 and the revenue earned during the year under review stood at Rs 250 crore. The company suffered a loss due to a steep fall in day rates as well as impairment of plant and machinery.

“At Aban, our priority will be to continue enhancing the utilisation of our assets, which would strengthen cash flows. We believe that this will strengthen our market respect and standing, which will be one decisive step towards business sustainability,” Reji Abraham, managing director, Aban Offshore wrote in the company’s Annual Report 2019-20.

In a letter to shareholders seeking a nod for an asset sale, Aban said the oil and gas industry has been undergoing a severe downturn and the company is having a cash flow crisis. The divestment will enable the company to reduce the debt.

The company had defaulted on payment of their borrowings which have fallen due and have breached the covenants of their borrowings which give the lenders the right to demand the related borrowings be due and payable immediately. The lenders had issued recall notices to the group and the company. The management had reclassified these borrowings of the group and the company, with original repayment terms beyond 12 months from the balance sheet date as current liabilities.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1COAI urges DoT to crack down on sale of illegal repeaters, boosters via e-commerce sites, outlets
2Hybrid working to become norm for FTSE 250 companies: Study
3Apple launches $200 million ‘Restore Fund’ to fight climate change