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Our Bureau

Mr P.T. Siganporia

Kolkata , March 9

TATA Tea Ltd on Wednesday announced that it had further restructured the entire debt portfolio of Tata Tea (GB) Ltd, the special purpose vehicle used for the acquisition of the UK-based Tetley Group.

Addressing a press conference, the Tata Tea Managing Director, Mr P.T Siganporia, said that as a result of the debt restructuring the debt-equity ratio of Tata Tea (GB) has been reduced to 1.6:1 from 1.8:1.

Tata Tea acquired the Tetley Group in March 2000 and that time the debt-equity ratio was 3.1:1. In February 2003 it was first reduced 1.8:1. As a result of this round of debt restructuring, the residual debt out of the first restructuring is fully paid off and replaced by a "fresh and cost effective debt."

The loan has been jointly arranged by Rabo Bank India and Rabo Bank International, London. Tata Tea has also underwritten this loan restructuring facility. Royal Bank of Scotland is one of the many financial institutions involved in this deal.

"The initial debt of Tata Tea (GB) aggregated to £184 million or Rs 1,527 crore and the weighted average interest was 2.95 per cent per annum over LIBOR. The refinanced debt now concluded is only £160 million pound sterling or Rs 1,328 crore and the weighted average interest is 1.4 per cent per annum over LIBOR," Mr Siganporia said.

As a result of this debt restructuring, Tata Tea would be saving around £2.75 million (Rs 23 crore) on its annual interest payout. There is a term component of £75 million (Rs 623 crore) and it is subject to bi-annual repayment. The entire debt facility is for a term of five years.

According to Mr Siganporia, the savings on the interest outgo would be spent on three areas of activity. The first would be nurturing the brand. The company would consider new offering like green tea and special tea. Tata Tea is also considering new markets.

When asked to specify on the new markets, he said that Tetley was introduced in South Africa in December 2004. "However, to avoid more competition I would not disclose the names of the other markets," he said.

Meanwhile, the company is waiting for shareholders' approval on the proposed restructuring of its South Indian tea gardens. When asked whether the proposal is facing any litigation, Mr Siganporia said: "Everyone is free to go to court on whatever issue he likes. Further to this I would not like to comment."

He was even non-committal on whether a similar restructuring is being contemplated by Tata Tea for its North Indian gardens.

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