Open / Close Advertisement

Tata Steel Executes Agreements to Refinance European Operations

09/30/2010 - Tata Steel UK Holdings signed a Senior Facility Agreement with a syndicate of 13 banks for a £3.53 billion term loan and revolving credit facility that is intended to replace in full the current term loan and revolving credit facilities entered into at the acquisition of Corus Group plc in 2007.

Tata Steel UK Holdings, a 100% indirect subsidiary of Tata Steel Ltd., signed a Senior Facility Agreement with a syndicate of 13 banks for a £3.53 billion term loan and revolving credit facility that is intended to replace in full the current term loan and revolving credit facilities entered into at the acquisition of Corus Group plc in 2007.
 
The new financing structure is in two parts: a five-year loan of around £1.8 billion equivalent and a seven-year loan of £1 billion equivalent. The revolving credit facilities for working capital purposes have been increased to £690 million and will have a tenor of five years.
 
Standard Chartered Bank and State Bank of India initially led these new financing arrangements; 11 more institutions joined the syndicate as Bookrunners, Underwriters & Mandated Lead Arrangers prior to signing. These are BNP Paribas S.A., Bank of America N.A., Credit Agricole CIB, Citicorp Securities Asia Pacific Ltd., Cooperatieve Centrale Raiffeisen Boerenleenbank B.A. (Rabobank International), Deutsche Bank A.G., HSBC Bank PLC, ICICI Bank Limited, ING Bank N.V., JP Morgan Chase Bank N.A., and The Royal Bank of Scotland. This transaction will continue to be syndicated to allow other banks that have a relationship with the company to participate as well.
 
Tata Steel says the new facilities have been designed to achieve certain key financing and business objectives: the syndicate comprises a smaller, coordinated group of banks with long-term relationships with Tata Steel; repayment obligations for the next five 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.
 
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 favorable financing structure for the future—is being achieved.”
 
Koushik Chatterjee, Tata Steel Ltd. Group Chief Financial Officer, said: “The execution of agreements for the refinancing 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.”
 
Established in 1907 as India's first integrated steel company, Tata Steel Group is one of the world’s top 10 steel producers with annual crude steel capacity of more than 28 million tonnes. With operations in 26 countries and a commercial presence in more than 50, Tata Steel Group has more than 80,000 employees across four continents and is a Fortune 500 company.
 
Tata Steel Europe (formerly Corus) is Europe's second largest steel producer. With main steelmaking operations in the U.K. and the Netherlands, the company supplies steel and related services to the construction, automotive, packaging, material handling, and other markets worldwide.