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UPDATE 1-Videocon to refinance,raise debt in $6 bln deal-sources

Source : REUTERS
Last Updated: Fri, Aug 03, 2012 15:00 hrs

* Refinances $3 bln, raises a further $3 bln-sources (Adds details)

By Prashant Mehra and Swati Pandey

MUMBAI, Aug 3 (Reuters) - Indian consumer electronics maker Videocon Industries plans to refinance a round $3 billion of debt to cut interest costs and standardise loan terms, five sources with direct knowledge of the deal said.

The diversified company, which recently made a series of oil and gas discoveries, is also raising another $3 billion in fresh long-term debt, partly to fund capex requirements for the energy business, the sources told Reuters on Friday.

As many as 27 banks are involved in the funding arrangement, including India's top lender State Bank of India, Punjab National Bank and IDBI Bank.

The first tranche of the deal will be signed next week, while the balance is expected to be finalised later this month.

Videocon Industries had long-term debt of nearly 273 billion rupees ($4.9 billion) at the end of December 2011.

The group, whose companies and subsidiaries have borrowed from various banks, has proposed bringing all the loans under a common pool and terms, one of the sources said.

"If the loans are scattered in many places, it makes sense for the borrower to consolidate it. It will save financing costs," said the source, declining to be identified as the matter is not yet public.

The deal will involve some reduction in interest rates for the banks, although loan tenure will broadly remain the same, another source said.

A Videocon spokesman was not immediately available for comment.

OIL & GAS FOCUS

Videocon, controlled by billionaire Venugopal Dhoot, operates in the consumer electronics, telecoms and power segments but expects most future growth to come from its recent focus on the oil and gas business.

The group holds a 10 percent stake in huge gas fields discovered off the coast of Mozambique and Tanzania that are estimated to hold between 30 and 60 trillion cubic feet (tcf) of recoverable gas.

Last month, it also announced discoveries at its Brazilian offshore blocks, where it holds minority stakes.

Dhoot has said he expects the oil and gas business to contribute 75 percent to group revenues in future. The blocks are expected to start producing in 2017.

The business, which will require billions of dollars in investment, is to be separated from the main company.

Videocon's main consumer electronics business has suffered in recent years through stiff competition from local and foreign rivals including LG and Samsung, although it remains a key player in the washing machine, refrigerator and television segments.

It is investing in a new appliances plant at Tamil Nadu in southern India, which is expected to start production later this year.

Shares in the company, valued at nearly $1 billion, have traded nearly flat so far in 2012, underperforming the 11.2 percent gain by the main stock index. The stock closed down 0.6 percent on Friday. ($1=55.7 rupees) (Editing by Sunil Nair and David Cowell)




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