Hindalco tapping bank funds to finance acquision of Aleris Corp
14 February 2019
Aditya Birla Group company Hindalco Industries Ltd, through its US unit Novelis Inc, is looking for funds to finance the acquisition of Aleris Corp, and is tapping a 20-strong consortium of Asian, European and US banks for a $2.28 billion loan facility.
The proposed dual-tranche loan facility includes a $1.5 billion 12-month bridge loan, and a $775 million five-year tranche, according to the people familiar with the matter.
In August last year, rolled-aluminum products giant Novelis announced the signing of a deal to acquire Aleris Corporation, in a move that will expand Hindalco’s presence in the automotive sector.
Aleris has 13 plants, including one in Hancock County.
Aleris last year expanded operations, building a 350,000-square foot building in Lewisport, Kentucky, at a cost of $400-million.
The acquisition of Aleris will provide Hindalco access to high-growth sectors, including automotive and transportation, and help enter the aerospace and defence sectors. A combination of Novelis and Aleris could also help Hindalco sell more premium aluminum alloy sheets to automakers wanting to reduce vehicle weights.
In November last year, Novelis Inc, the world leader in aluminum rolling and recycling, announced an investment of $175 million in Brazil, at its Pindamonhangaba plant, located in the Paraíba Valley between São Paulo and Rio de Janeiro. The expansion bolstered the company's beverage can and specialty customers by bolstering capacity with 100 kilotonnes of additional rolling production and 60 kilotonnes of increased recycling.
These expansions brought total capacity of the Pindamonhangaba facility to approximately 680 kilotonnes per year of aluminum sheet and 450 kilotonnes annually of recycled metal.
Novelis Inc is the global leader in aluminum rolled products and the world's largest recycler of aluminum. The company is headquartered in Atlanta, Georgia, operates in 10 countries, has approximately 11,000 employees and had $11.5 billion in revenue for its 2018 fiscal year. Novelis supplies premium aluminum sheet and foil products to transportation, packaging, construction, industrial and consumer electronics markets throughout North America, Europe, Asia and South America.
Hindalco reported an 8 per cent increase in Q3 2018-19 revenues at Rs11,938 crore against Rs11,044 crore in Q3 FY18.