Tata Steel Ltd., India’s biggest producer of the alloy, said it obtained 3.53 billion pounds ($5.6 billion) of loans to replace the debt used to buy Corus Group Plc in 2007.
The refinancing for the company’s U.K. unit consists of a five-year term loan of about 1.8 billion pounds; a 1 billion pound, seven-year term loan; and a 690 million-pound five-year revolving credit line, Mumbai-based Tata Steel said today in a statement. Tata Steel UK Holdings took out 3.6 billion pounds of loans in 2007 for the $12.9 billion acquisition of Corus, according to data compiled by Bloomberg.
The new financing pays an average interest rate of “mid- 300 basis points” more than benchmark lending rates, Koushik Chatterjee, Tata Steel’s chief financial officer, said today in an e-mailed reply to questions from Bloomberg. A basis point is 0.01 percentage point.
The facilities, which have looser financial covenants, allow Tata Steel to minimize loan repayments for the next five years and boost capital expenditures in Europe, according to the statement. Tata Steel has repaid about 900 million pounds of debt in the last 18 months, the company said.
“In the current global financing environment, the terms of this refinancing are exceptional for their flexibility and attractiveness to the business,” Chatterjee said in the statement.
The steelmaker agreed to pay interest margins as much as 275 basis points more than the London interbank offered rate, or Libor, for the loans taken in 2007, which would have matured between 2012 and 2014, according to data compiled by Bloomberg.
To contact the reporters on this story: Patricia Kuo in London at +44-20-3216-4103 or pkuo2@bloomberg.net; Simon Casey in London at +44-20-7673-2631 or scasey4@bloomberg.net
To contact the editor responsible for this story: Simon Casey at +44-20-7673-2631 or scasey4@bloomberg.net
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