Aban seeks moratorium on short-term loans

Aban Offshore, the biggest oil rig company with a huge debt, is negotiating with State Bank of India (SBI) and Punjab National Bank (PNB) for a moratorium on short-term loans after failing to refinance Rs 200-crore bullet loan due last month, according to sources. The company, which piled up a loan of more than Rs 16,000 crore during its acquisition of Norway’s Sinvest in 2006, has another $335 million (Rs 1,535 crore) of loans coming due by the end of this month. 
Care Ratings, last month, lowered ratings on many of Aban’s notes, including short-term bank facilities of Rs 400 crore. Its rest of the long-term loans have been rated as Double B reflecting high-credit risk. The ratings revision primarily factors in the inability of AOL to successfully refinance its bullet loans in a timely manner. 
Aban acquired the Norwegian company during the oil boom with huge borrowings. But the market crash left many of its rigs jobless and made it difficult for it to service its loans. While most loans have been restructured and that some rigs have been put to operations, the cash flow is still not back to the peak days, so debt repayments are still a struggle for the company. A majority of its loans of Rs 13,000 crore is in the books of its Singapore subsidiary, while Aban’s loan is at Rs 3,286 crore.