Tata Steel to raise $73 mn via ECBs

Tata Steel has signed two external commercial borrowing agreements aggregating ¤61.42 million ($ 73.36 million) at Frankfurt, Germany.

A company statement to the Bombay Stock Exchange today said that the funding would be utilised to finance the import component of blast furnace H and sinter plant 4 as part of the ongoing expansion project in Jamshedpur.

Blast furnace H, which will produce 2.5 million tonne per annum of hot metal, has been contracted to Paul Wurth Italia and Larsen & Toubro for commissioning. Sinter plant 4 of 2.3 million tonne per annum capacity is contracted to Outokompu Technology GmbH, Germany and Larsen & Toubro.

The agreements were signed with Deutsche Bank Aktiengesellschaft, Frankfurt am Main as original lender. These facilities are insured by SACE S.p.A. (Servizi Assicurativi per il Commercio Estero) of Italy and Euler HERMES Kreditversicherungs-Aktiengesellschaft of Germany.

The loans have a repayment period of 10 years and an availability period of approximately three and two years respectively. The coupon on the loans will be Euribor plus 12 basis points.

In the FY06, the steel major has completed $ 971 million (about Rs 4,300 crore) of external commercial borrowings including the latest one. It comprises an IFC (& IFC syndicated) loan of $ 400 million; a syndicated loan of $ 500 million.

The $500 million loan was subscribed to by 17 banks across geographies and the borrowing agreement was signed in Singapore. The loan with a 7 year maturity carries a coupon of Libor (London inter-bank offer rate) plus 45 basis points.