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Tata Steel UK Holdings, a wholly-owned subsidiary of Tata Steel, has refinanced loans worth €3.05 billion, taken to acquire Corus Plc.
The new financing structure consists of a five-year loan of €370 million, a six-year revolving credit facility of £700 million for working capital and a seven-year loan of €1.8 billion with more favourable terms and pricing relative to the earlier debt, said Tata Steel in a statement on Thursday.
Tata Steel bought Corus for $12.04 billion, piping the nearest rival Brazil’s CSN in a nine-round auction process at the peak of commodity boom, making it the biggest acquisition by an Indian company till date.
Incidentally, the company initiated talks with the Klesch Group, a Swiss Investment bank, to undertake “detailed due diligence and negotiations” for the possible sale of its long steel business and associated distribution activities in Europe on Wednesday.
Fresh loan In a similar development, Tata Steel Global Holdings, an indirect subsidiary of Tata Steel incorporated in Singapore, has reached agreements to raise fresh capital of $1.5 billion. The loan is in two parts: a$700 million tranche repayable in five years, and $800 million for seven years.
The proceeds of this loan will be used to repay term debts, meet working capital and fund investment needs of the Tata Steel Group outside India.
Overseas refinancing ends The fund-raising, along with the recent bond issuance of $1.5 billion in July, completes the restructuring and refinancing of the entire international debt portfolio and de-risking of the capital structure of the Tata Steel Group.
The overall capital structure and the consolidated leverage level will remain unaffected by this financing, while the cost of the same will be lower.
Koushik Chatterjee, Group Executive Director (Finance and Corporate), Tata Steel, said the new loan facilities are being put in place well ahead of any material maturities of the existing debt structure of the Tata Steel Group.
The financing structure was designed with flexible terms and better pricing that will provide financial headroom to the international business especially in Tata Steel Europe in the coming years, he added.
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