JSW Steel to raise $200m loan to fund expansion

JSW Steel Ltd has entered the debt market to raise $200 million through an overseas loan issue to part-finance the company's expansion plans for its plant in Karnataka, Director (Finance) Seshagiri Rao M V S said on Thursday.

JSW Steel will raise another $75 million later this month through another overseas debt issue. "We have launched the overseas loan issue last Friday," the official said.

ABN Amro Bank has been mandated to manage the partially underwritten issue and has agreed to underwrite the issue to the tune of $100 million.

The syndicated loan will be funded by ABN Amro, along with five or six other foreign banks. The loan issue has been specifically targeted at foreign-owned banks.

The issue will close for subscription on March 18. The foreign loan will have a disbursement-to-repayment tenure of seven years. JSW is targeting an interest rate of London Inter Bank Offered Rate plus 175 basis points.

The annual capacity of the plant in Karnataka will be raised to 7 million tonne from around 4 million at an estimated cost of Rs 50 billion.

Of the Rs 50 billion requirement, the company will raise Rs 30 billion via loans"�of which Rs 17.5 billion will be raised through domestic loans and the remaining through an overseas loan.

The second tranche of $50 million will be targeted at domestic banks with overseas branches and will also be utilised to fund the expansion project. State Bank of India has been mandated to manage the issue.