In a filing to the bourses after market hours, the company said Tata Steel UK Holdings, an indirect but wholly owned subsidiary, had executed agreements for refinancing of its bank debt through term loan and revolving credit facilities of 3.05 billion euros.
The debt was originally incurred in relation with the acquisition of Corus Group in 2007, Tata Steel said in its statement. The new financing structure consists of a five-year loan of 370 million euros, a six-year revolving credit facility for working capital purposes of 700 million and a seven-year loan of $1.8 billion. The terms and pricing of the newly raised debt are more favourable than the earlier debt.
Tata Steel Global Holdings Pte, another wholly-owned, indirect subsidiary of Tata Steel incorporated in Singapore has also executed agreements for loan facilities of $1.5 billion comprising a five-year loan of $700 million and a seven-year loan of $800 million. The proceeds of this loan will be used to repay term debts, term out working capital and fund investment needs of the Tata Steel Group outside India, the company 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, Koushik Chatterjee, group executive director, finance and corporate at Tata Steel said.
The financing structure has been 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.
In July, Tata Steel had raised $1.5 billion through an international bond issuance, and with the current round of debt refinancing, Tata Steel's announced debt refinancing programme has concluded, Chatterjee said, and added that Tata Steel's finance costs will come down as a result of this exercise, while keeping the overall leverage of the group at the same level.
Tata Steel's consolidated net debt stood at around Rs 67,700 crore as on June 30. The majority of this debt is on account of its European operations.
The five-year loan and revolving credit facilities for Tata Steel UK Holdings and the loan facilities for Tata Steel Global Holdings have been synidcated by 18 lead arrangers including ANZ, Bank of America
Merrill Lynch, BNP Paribas, Citi, Credit Agricole, Deutsche Bank, HSBC and Rabobank. The remaining debt was arranged by seven Indian banks, including State Bank of India, ICICI Bank, Bank of Baroda, Bank of India, Exim Bank of India, Syndicate Bank and SBI (Mauritius).