Tata Steel Said to Be in Talks to Cut $1.5 Billion Loan CostGeorge Smith Alexander, Anurag Joshi and Abhishek Shanker
Tata Steel Ltd., India’s top producer of the alloy, is in talks with lenders to reduce interest costs on $1.5 billion of loans taken last year, three people familiar with the matter said.
The company is seeking to shave as much as 90 basis points on the borrowing, said one of the people, who asked not to be identified as they aren’t authorized to speak publicly on the subject. One of the tranches is a five-year loan of $700 million at 280 basis points over Libor, and the other is a seven-year debt of $800 million at a 315 basis point spread, according to data compiled by Bloomberg.
A successful deal would help the Mumbai-based company to cut finance costs that climbed to a record 48.5 billion rupees ($765 million) in the year through March. Tata Steel was the biggest Indian borrower abroad in 2014, raising the equivalent of $5.3 billion to meet capital expenditure and refinance debt.
The alloy maker has faced surging interest costs after its 2007 acquisition of Corus Group Plc for $12.9 billion. Chanakya Chaudhary, a Tata Steel spokesman, declined to comment on the plan.
Shares of Tata Steel rose as much as 1.2 percent to 308 rupees and traded at 306.35 rupees as of 10:07 a.m. in Mumbai, narrowing this year’s loss to 23 percent. The benchmark S&P BSE Sensitive Index has gained 2.3 percent this year.
Australia & New Zealand Banking Group Ltd., Bank of America Corp., 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 Group and Standard Chartered Plc were the original mandated lead arrangers and bookrunners for Tata Steel’s loan.