Tata Steel ties up with clutch of banks to raise $4 billion debt: Tata steel, Indias largest steel producer, has tied up foreign debt of nearly $4 billion from a clutch of foreign and state-owned banks. The loan, designated in Euro and sterling pound, is aimed at refinancing the existing debt the company raised to acquire the UK-based steel company Corus Group Plc. The company had raised $12.9 billion for the acquisition in 2007. Of this, State Bank of India (SBI) is providing the single largest facility of Euro 1.8 billion while the remaining fund-raising exercise is being shared by 10 other foreign lenders. Tata Steel did not respond to a detailed email questionnaire sent by dna on the refinance deal. A foreign banker providing finance said, Tata Steel will raise Euro 1.8 billion from SBI while a clutch of foreign banks will give the company two facilities Euro 400 million five year loan and another revolving credit facility of Sterling 700 million. Standard Chartered, HSBC, Citi and Duetsche Bank are some of the banks that the company is sourcing its loans from. At the companys annual general meeting last month, Kaushik Chatterjee, group CFO, Tata Steel, had said the company was planning to raise $5-$5.5 billion in the current fiscal (2014-15) as part of its debt refinancing exercise. This exercise, according to him, would have helped the company save 25-30 basis points in interest rate. Another foreign banker participating in the deal said, Eleven international and Indian banks will refinance the loan it took for Corus acquisition. Some part of the loan is also taken by the procurement arm of Tata based in Singapore and the major chunk is by Tata Steel Europe. The overall cost of the debt would be 350 basis over Libor. Kaushik Chatterjee earlier had said that the company has already raised $1.5 billion through bond issuance and was more likely to raise another $4 billion over the course of the year. In June, the steelmaker had informed exchanges that its board had sought shareholder approval for further issuance of privately placed debt securities (convertible into equity or otherwise) in the international and/or domestic capital markets for an amount not exceeding Rs14,000 crore. In the companys first quarter earnings presentation, the steelmaker said it had undertaken $7 billion worth of refinancing exercise. $7 bn is all-inclusive, including the funding required by our overseas and mining ventures. Out of this, only refinancing is about 3 billion pounds (which is about $5.5 billion), which we would be raising over the course of current fiscal, Chatterjee had explained then. Tata Steels consolidated interest rate on debt is around 8% which is a mix of foreign and Indian debt. Analysts said that the companys interest rate on an average is around 6.2%. The steel majors debt refinancing exercise is mainly aimed at bringing down high European operations debt, which has been making losses for the past few years due to slowdown in that economy. European operations are improving but at a slower pace. A foreign banker undertaking the deal said, The company is also sourcing at a cheaper rate than the earlier fund raising that they undertook when they raised money at 450 basis over Libor. ReportMoneyManju ABDhwani PandyaDNAMumbaibankdebtEconomycapital marketsFinanceTata steelState Bank of India (SBI)Wednesday, 17 September 2014 - 5:15am dnai.in/cng21 dnaindia/money/report-tata-steel-ties-up-with-clutch-of-banks-to-raise-4-billion-debt-2019212
Posted on: Tue, 16 Sep 2014 23:58:38 +0000
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