Essar Steel caught the investor's eye today on reports that the company will buy-back FRNs worth $250 million at a solid discount.

The news propped up the steel major by 7.83% to Rs 8.95 in morning trades. It came off the intra-day high of Rs 9.70. Substantial volumes of over 9 lakh Essar Steel shares changed hands on BSE by 11:30 IST.

The Ruia group steel major is reported to have succeeded in clinching a deal for buying back floating rate notes (FRNs) worth $250 million at a massive discount of 76%.

The company, the first Indian company to default on repayment of foreign loans, will now buy back the $1,000 note at a price of $240.

The buy back at an awesome discount is ominious for the company's prospects as it will boost bottom line on fall in interest outgo.

Earlier, in January 2003, financial institutions had finalised a debt restructuring package for the company. IDBI and IFCI had approved a recast of Rs 20,000-crore worth of loans to Essar Steel, Jindal Vijaynagar Steel and Ispat Industries.

For the quarter ended 31 March 2003, the company cut down its losses to Rs 36.35 crore (loss of Rs 186.39 crore) on a 87.2% rise in net sales to Rs 925 crore (Rs 494.10 crore).

As on 31 March 2003, promoters held 33.56% stake in Essar Steel, while the public and institutions held 50.42% and 4.95%, respectively.