No plans to raise equity after Stanflow deal: Essar Energy

After announcing the USD 1 billion deal to buy Royal Dutch Shell's Stanlow Refinery, Essar Energy said that it has no further plans to raise more equity as the Stanlow Refinery purchase has to be funded, reports CNBC-TV18 quoting sources.
Essar Energy will pay an additional USD 780 million to pick up the refinery's assets. The company is still working on the details of funding Stanlow Refinery acquisition.
Stanlow EBITDA for the first half of calendar year 2010 stood at USD 63 million and GRM came in at USD 4.9 per barrel. Stanlow Refinery carries a capacity of 75% i.e. 296,000bpd and will seek to optimise asset utilization post acquisition. The inventory is to be bought at market price during the deal completion.
Stanlow, at present, has no pension fund deficit and capex requirement. Shell will source crude to Stanlow for five years and after that, it will review Stanlow's sourcing pact. Stanlow's sourcing agreement with Shell was par with the market price at the procurement time. Shell has, however, decided to export oil to Stanlow only if it makes economic sense.
Shell's reference margins have improved in the past quarters and the company sees the trend continuing for the current quarter as well. It expects healthy refinery margins by the year end.
Essar Energy's expectations from the Stanflow deal
Looking at total capacity of 1 mbpd, Stanlow acquisition is to bring total capacity to 750,000 bpd to Essar. The company is planning to expand refinery capacity at Vadinar by 350,000 bpd. It expects capex plans to cost between $4.5-5 billion and will look at all options to raise funds for capex plans. Company's debt requirement for next 1-2 years is fully tied up.
Essar Energy is looking beyond India for raw material sources, while considering opportunities in upstream & downstream space, mainly in upstream. It has a target to meet 30% of total crude needs from its own sources.