TATA Steel executes agreements for the refinancing of its debt in Europe
TATA Steel announced that it has executed agreements for the refinancing of its European operations.
TATA Steel UK Holdings, a 100% indirect subsidiary of TATA Steel Limited, signed a Senior Facility Agreement with a syndicate of 13 banks for a GBP 3.53 billion term loan and revolving credit facility which is intended to replace in full the current term loan and revolving credit facilities entered into at the time of the acquisition of Corus Group plc in 2007.
The new financing structure is in two parts
1. 5 year loan of around GBP 1.8 billion equivalent
2. 7 year loan of GBP 1 billion equivalent
The revolving credit facilities for working capital purposes have been increased to GBP 690 million and will have a tenor of 5 years.
Standard Chartered Bank and State Bank of India initially led these new financing arrangements, while 11 more institutions joined the syndicate as Bookrunners, Underwriters & Mandated Lead Arrangers prior to signing in a reflection of the strong ties between TATA Steel and its core relationship banks. These are: BNP Paribas SA, Bank of America NA, Credit Agricole CIB, Citicorp Securities Asia Pacific Limited, Cooperatieve Centrale Raiffeisen Boerenleenbank B.A. (Rabobank International), Deutsche Bank A.G., HSBC Bank PLC, ICICI Bank Limited, ING Bank NV, JP Morgan Chase Bank NA and The Royal Bank of Scotland. This transaction will continue to be syndicated in order to allow other banks that have a relationship with the company to participate as well.
The new facilities have been designed to achieve certain key financing and business objectives for the company: the syndicate comprises a smaller, coordinated group of Banks with long term relationships with TATA Steel; repayment obligations for the next 5 years have been minimized; 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.
Mr Kirby Adams TATA Steel Europe MD & CEO said “Lenders to TATA Steel showed confidence by supporting the Company’s plans to weather the financial crisis. In the week that we have rebranded our European operations as TATA Steel, this refinancing agreement is an important sign of our Banks’ sustained confidence in our plans for the future. As I prepare to hand over the reins of TATA Steel Europe to Karl-Ulrich Köhler, it is very satisfying that another key strategic objective of the Company the securing of a sound and more favourable financing structure for the future is being achieved.”
Mr Koushik Chatterjee TATA Steel Limited Group Chief Financial Officer said “ The execution of agreements for the re-financing of our European debt marks an important financing milestone for Tata Steel Group. In the last 18 months, Tata Steel Group has repaid significant debt of approximately equivalent to £ 900 million, but it has remained an important goal to rework the Group’s capital structure especially in Europe. In the current global financing environment, the terms of this refinancing are exceptional for their flexibility and attractiveness to the business. I would like to thank all the Banks that have demonstrated the strength of their relationships with Tata Steel through this agreement, which will provide further robustness to Tata Steel Group as work continues on reshaping its Balance Sheet.”