The Hindu Business Line : PSL achieves financial closure for Mississippi venture

Mumbai, Nov. 6 Mumbai-based pipe manufacturer PSL Ltd said on Tuesday that it had achieved financial closure for the development of its integrated pipe manufacturing and coating joint venture at Bay St. Louis, Mississippi.

It has raised $78 million by issue of a 25-year bond by the Mississippi Business Finance Corporation. PSL is investing $103 million through a joint venture company PSL North America.

The support by the Mississippi State Government, through the Mississippi Business Finance Corporation, helped the company decide on the location.

The bonds that have a tax-free $68-million tranche would provide for substantial cost benefits.

The company said the bonds of investment grade rating required the issuance of financial guarantees from the State Bank of India and JPMorgan Chase, and with these in place, they were fully subscribed.

By using this structure, the company was able to achieve a competitive financing cost for a 25-year tenor. The loan markets would have been able to provide tenors of only up to 5 years, which would have been higher by 3.0 -3.5 per cent per annum, it said.

The first phase of the project entails setting up an integrated pipe facility that will manufacture, coat and internally-line large diameter API grade pipe in diameters ranging from 24 inches to 60 inches, with wall thickness of quarter inch to 1 inch and length up to 80 ft.

PSL said high crude oil prices are generating significant demand for pipeline worldwide and over the next five years about 250,000 km pipeline networks are planned globally, of which over 100,000 km are estimated to be implemented in North America, West Asia and Asia.

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