Tata Steel UK Holdings, a 100 per cent indirect subsidiary of Tata Steel, today signed a senior facility agreement with a syndicate of 13 banks for an over $5-billion (Rs 22,500 crore) term loan and revolving credit facility, intended to replace the current term loan and revolving credit entered into at the time of the acquisition of Corus in 2007.
The new financing structure is in two parts — a five-year loan of around £1.86 billion equivalent and a seven-year loan of $1.58 billion equivalent. The revolving credit facilities for working capital purposes have been increased to $1.08 billion and will have a tenor of five years.
Standard Chartered Bank and State Bank of India initially led these new financing arrangements, while 11 more institutions joined as bookrunners, underwriters and mandated lead arrangers.
This transaction will continue to be syndicated, to allow other banks that have a relationship with the company to participate as well.
A Tata Steel release said the new facilities had been designed to achieve certain key financing and business objectives for the company. The syndicate comprises a smaller, co-ordinated group of banks with long-term relationships with Tata Steel; repayment obligations for the next five years have been minimised; there is flexibility to incur higher capital expenditure in Europe and to raise working capital, depending on business needs; and the new financing arrangements carry lighter financial covenant obligations.
Tata Steel Group Chief Financial Officer Koushik Chatterjee said the agreements for re-financing of the European debt marks an important financing milestone. In the past 18 months, Tata Steel had repaid debt of £900 million, but it has remained an important goal to rework the Group’s capital structure, especially in Europe.
