Novelis raising $4 billion to refinance Hindalco debt

Novelis, the Canadian arm of Aditya Bilrla Group firm Hindalco Industries, has entered into a $4-billion loan-cum-debt deal to refinance a high-cost debt taken by Hindalco.

Novelis has arranged $4 billion financing with five banks, consisting of $2.5 billion in debt and $1.5 billion in secured long-term credit that will partly refinance the loans that Hindalco had taken for the $6-billion acquisition of Novelis in 2007.

Novelis Inc will issue $2.5 billion in debt consisting of 8.375 per cent senior notes worth $1.1 billion due to mature in 2017 and 8.75 per cent senior notes worth $1.4 billion maturing in 2020.

The new senior notes are priced at par value and will bear an interest rate of 8.375 per cent (in the case of the 8.375 per cent senior notes due 2017), and 8.75 per cent (in the case of the 8.75 per cent senior notes due 2020, payable semi-annually on 15 June and 15 December, beginning 15 June 2011. 

The company expects to close the offer of the new senior notes on 17 December 2010, subject to the satisfaction of customary closing conditions and the refinancing. 

As part of the refinancing, Novelis also intends to enter into a new $1.5 billion secured term loan credit facility and replace its existing $800 million asset-based loan (ABL) facility with a new $800 million ABL facility.