Tata Steel raises $1.5 billion to refinance offshore debt

03 Dec 2015

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Tata Steel's Singapore subsidiary, TS Global Holdings, has contracted a loan of $1.5 billion to repay its existing debt. The Tata Steel unit also executed an agreement to refinance its debt, the metal major said on Wednesday.

The proceeds will be used to repay existing term loans of TSGH, it said.

The loan, raised through a consortium of 16 local and international lenders, comprises loans of five-year and six-year tenure of $750 million each, Tata Steel said.

The lead arrangers of the loan include Australia and New Zealand Banking Group Ltd, Axis Bank Ltd, Bank of America NA, Bank of Tokyo-Mitsubishi UFJ Ltd, BNP Paribas, Citigroup Global Markets Asia Ltd and ICICI Bank, among others.

Tata Steel group executive director-finance and corporate Kaushik Chatterjee said, "Tata Steel actively reviews all its financing options and seeks to continuously optimise its debt based on market conditions."

"The new loan facilities provide significantly greater flexibility in their terms and conditions and provide savings in cost, besides extension of tenor. This will provide greater financial headroom for the business, as it faces tough market conditions, even as overall leverage and debt remain unaffected", he said.

Tata Group is among the top 10 global steel companies with an annual crude steel capacity of about 30 million tonnes per annum after the acquisition of European Steel giant Corus.

Tata Steel has also been raising funds to refinance the debt linked to the company's $13 billion acquisition of UK's Corus in 2007.

The company has been trying to revive the British operations of Corus, by curbing spending, limiting inventories and even cutting thousands of jobs. Corus, now known as Tata Steel Europe, reported a loss of Rs238 crore in the second quarter of fiscal 2016 as a flood of cheaper imports from China limited demand for its products.

The new loan facility provides greater flexible terms and financial headroom for the business as it faces tough market conditions, Koushik Chatterjee, chief financial officer of Tata Steel in a statement. "The company's overall leverage and debt remains unaffected," Chatterjee said.

Tata Group is among the top 10 global steel companies with an annual crude steel capacity of about 30 million tonnes per annum.

The group with a turnover of $22.32 billion in fiscal year 2014-15 has over 80,000 employees and is a Fortune 500 company.

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