UPL Ltd. said it will repay the $3-billion debt from acquiring Arysta LifeScience Inc. within the next three-and-a-half years.
The deal will generate enough cash to help reduce the leverage much before the five-year term limit, Chief Executive Officer Jai Shroff told BloombergQuint.
“The Ebitda (earnings before interest, tax, depreciation and amortisation) of the joint business is expected to be $1 billion-plus on a proforma basis,” Shroff said. The terms of financing the debt are also very good, he added.
We have been able to secure funding from our banks on a five-year term loan basis for about less than 4 percent.Jai Shroff, CEO, UPL
This means the company's interest burden will be close to $120 million, he said.
UPL on Friday agreed to acquire agri-pesticides maker Arysta LifeScience for $4.2 billion to become one of the world's largest crop protection companies. The buyout will be backed by a $1.2-billion equity investment by Abu Dhabi Investment Authority and TPG. The remaining $3 billion will be financed by debt.
This will add to the company's Rs 6,507-crore debt pile, as of March 2018.
UPL has been growing 10-15 percent for the last 10 years, Shroff said. The earnings growth estimation for the coming years, coupled with cost optimisation, will make this deal “extremely cash-generating and will help us to reduce leverage”, he said.
Shares of the company closed Tuesday session 0.3 percent lower at Rs 630.2 apiece.
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