RINL to raise Rs 22,500 cr long-term debt

Rashtriya Ispat Nigam Ltd (RINL) has planned to raise Rs 22,500 crore ($5.06 billion) debt to finance its expansion.

The public sector steel major has sought views before the expression of interest from 44 State-owned and private banks, including foreign banks, for participation in this massive debt programme.

Sources in the banking circles told Business Line that RINL has planned the financial closure by the end of 2011 and the phased drawdown would continue for next two years in tandem with its requirement.

RINL is looking for advice from the bankers on structuring of the loan as well recommendation on an appropriate currency or a basket of currencies and also the tenure that provides the best bargain in the current global interest rate regime.

Sources said RINL was open to the idea of convertible or pure debt instruments, but the bankers would be required to advice and organise funds considering the cost.

Mr P.K. Bishnoi, CMD of RINL, on Monday confirmed to Business Line the plan for the debt fund-raising “in consultations with bankers”. But he declined to give details.

Currently zero-debt, unlisted RINL boasts of a net worth of Rs 13,500 crore – Rs 8,000 crore paid-up equity and Rs 5,500 crore free reserves.

The company will make detailed presentations to all the 44 bankers in Mumbai in a pre-EoI meeting, likely in the first week of June, the country head of foreign bank said.

Sources said that the debt plan is to partially fund the target of reaching 11.5 mtpa capacities by 2015-16 (from the current 3 mpta), aiming a debt-equity ratio of 1.5:1.

RINL has further informed bankers that production capacity additions, under implementation, are of three stages. The first of 3.3 million tonnes (mt), to be fully commissioned later this fiscal, will take the yearly production to 6.3 mt and cost Rs 12,500 crore.

The second, modernisation and upgradation, to be completed by 2013-14, will expand production base to 7.3 mt at a cost of Rs 7,000 crore. The third, aims to create new capacity for flat steel products of 4 mt by 2015-16 involving an expenditure of Rs 25,000 crore.

RINL in April assigned Dastur & Co to prepare the detailed project report for the third phase.

According to sources, the fully Government-owned RINL's shore-based steel plant at Visakhapatnam has 20,000 acres, which can house facilities capable of producing 20 mtpa steel, one of the largest at one location.

Apart from major domestic banks including investment banks, RINL has invited JP Morgan Chase, BNP Paribas, Bank of Tokyo Mitsubishi JFJ, Bank of America, Merrill Lynch, Goldman Sachs, Credit Agricole, Deutsche Bank, Citi Bank and Royal Bank of Scotland to join the exercise.

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