Tata Steel Ltd. (TATA) hired banks to raise the equivalent of $5.6 billion, the most since the acquisition of Corus Group Plc in 2007, to refinance debt taken to fund the purchase of Europe’s second-largest steelmaker.
The multi-currency loan sought by the India’s biggest producer of the alloy includes two seven-year amortizing facilities of 1.8 billion euros ($2.4 billion) and $1.5 billion, a 700 million-pound ($1.2 billion) six-year revolving credit facility and a 370 million-euro five-year term loan, a person familiar with the program said yesterday.
Tata Steel, which purchased U.K.-based Corus for $12.9 billion, is seeking to benefit from a revival in demand in Europe, the company’s biggest market, and falling borrowing costs to refinance part of the $6.14 billion obligation taken to finance the Corus acquisition. Tata Steel has the equivalent of $15.3 billion of bonds and loans due, according to data compiled by Bloomberg.
Tata Steel hired State Bank of India to arrange the 1.8 billion-euro facility, while Australia and New Zealand Banking Group Ltd., Bank of America Merrill Lynch, Bank of Tokyo-Mitsubishi UFJ Ltd., BNP Paribas SA, Citigroup Inc., Credit Agricole SA, Deutsche Bank AG, HSBC Holdings Plc, Royal Bank of Scotland Group Plc, Rabobank International, Standard Chartered Plc will arrange the three other facilities.
The Mumbai-based company may also price a new dollar-denominated 5.5- and 10-year fixed-note issuance this week, according to a person familiar with the matter. The notes are rated BB and BB+ by Standard & Poor’s and Fitch Ratings Ltd. respectively.
Tata Steel spokesman Kulvin Suri didn’t reply to an e-mail seeking comment yesterday.
Standard and Poor’s July 21 raised the outlook on Tata Steel’s debt to stable from negative on expectations the company’s leverage would improve with better operational performance and lower capital expenditure starting next year.
Tata Steel shares rose 2.4 percent to 568.10 rupees in Mumbai, versus a 0.5 percent gain in the benchmark S&P BSE Sensex index.
The company reported a profit including that of Tata Steel Europe Ltd. of 10.4 billion rupees ($173 million) in the quarter ended March 31, compared with a 65.3-billion-rupee loss a year earlier. Group steel deliveries rose 16 percent in the quarter to 7.62 million tons.
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