Tata Power to raise $560 mn abroad

Company is marketing a $460-mn, 18-month loan and another of $100 mn as a three-year facility, say bankers

Tata Power is raising $560 million (Rs 3,360 crore) from the international market to refinance old debts due in the next few months. Bankers say the company is marketing a $460-million, 18-month loan and another of $100 million as a three-year facility.

State Bank of India, ANZ, Bank of America Merrill Lynch, RBS and Standard Chartered are marketing the loan on the company's behalf.

Last week, Tata Power Chairman Cyrus Mistry told shareholders the company planned to dilute its non-core investments to reduce debt, as well as refinance loans. As of March 31, the company's consolidated net debt stood at Rs 38,618 crore, compared with Rs 35,892 crore a year earlier.

Recently, Tata Power had sold its stake in Indonesian coal firm Arutmin for $510 million. The company expects the deal to be completed by the end of this year.

A host of Indian companies, including Essar, Reliance Industries and Tata Steel, are refinancing old debt with new loans, at lower rates. Last week, Tata Steel said it would save 40-45 basis points on interest after refinancing its $1.5-billion debt through a bond issue. The company is refinancing total debt of $5.5 billion this financial year.

On a consolidated basis, Tata Power recorded a loss of Rs 91 crore for 2013-14, on revenue of Rs 8,844 crore, according to data given to BSE.

Analysts expect the company's Maithon unit to record better fixed cost recovery this financial year, as transmission issues are likely to be resolved. A power purchase agreement to supply 300 Mw of the company's total capacity of 1,050 Mw has been signed with the Delhi distribution utility. Similar pacts have also been signed with West Bengal (300 Mw), Damodar Valley Corporation (300 Mw) and the Kerala State Electricity Board (150 Mw).