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Essar Oil UK to raise 400 million to evade financial troubles

Essar Oil UK, the owner of Stanlow Refinery, said it has successfully addressed the required financing to replace the previous receivables facility

twitter-logoNevin John | April 23, 2021 | Updated 22:19 IST
Essar Oil UK to raise £400 million to evade financial troubles
Essar Oil UK operates the Stanlow Refinery located on the south side of the Mersey Estuary near Liverpool

Essar Oil UK, controlled by the Ruias, is in advanced negotiations with Apollo Global Management and three other banks to raise GBP 400 million to repay the credit raised against receivables from Lloyds Bank. The British lender had ceased acting as Essar's main banker after the company ran into financial troubles due to pandemic-led disruptions.

Essar Oil UK, the owner of Stanlow Refinery, on Thursday said it has successfully addressed the required financing to replace the previous receivables facility. It will sign the term sheets soon to finally draw the credit and close the liabilities pending with Lloyds, said sources.

According to the management, the product sales at Essar Oil UK have improved with the easing of lockdown restrictions in the country. The oil refiner expects to generate positive earnings before interest, tax, depreciation and amortisation (EBITDA) of $40 million in the ongoing quarter. In comparison, it had negative $18 million EBITDA in the corresponding quarter of 2020. It generated of $300 million EBITDA before the pandemic.

"The refinery continues to operate as normal, with uninterrupted supply of products to meet the needs of our customers. Demand for the refinery's products continues to strengthen alongside the easing of lockdown restrictions in the UK," the company said in a statement.

The company also expects benefits from the anticipated recovery in aviation fuel demand in the coming months. It is also planning to conclude further financing by June, besides delivering operational cost reduction initiatives during the year to further improve the position.

Essar Oil UK operates the Stanlow Refinery located on the south side of the Mersey Estuary near Liverpool. It produces 16 per cent of UK's road transport fuels and processes 10 million tonnes of crude and feedstocks annually.

Since acquiring Stanlow Refinery in 2011, Essar claimed it has invested $1 billion in the business. The refinery is the mainstay business of the Ruia family at present.

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