Tata Steel is re-negotiating the terms of the debt it raised to fund the $12-billion buyout of Anglo-Dutch steelmaker Corus in early 2007.
Officials of Tata Steel UK, a fully-owned subsidiary of the world’s sixth largest steel maker, have held meetings with bankers who helped raise the funds for the Corus acquisition.
Tata Steel has not sought any additional funding or requested a re-scheduling of its debt servicing obligations.
Instead, as part of the fresh terms, the company is voluntarily pre-paying over £200 million of the non-recourse debt as it tries to de-leverage its European operations.
The debt payback would be funded through additional support from Tata Steel Ltd, which continues to have a significant liquidity buffer. Tata Steel UK has appointed Citigroup, Royal Bank of Scotland and Standard Chartered as the coordinating banks to facilitate the process.
The company has informed its lenders that it has taken significant steps to restructure its operations and reduce costs to weather the downturn.
While this would enable the company to emerge stronger with improved profitability in the future, in the near term there could be an adverse impact on its earnings before interest, tax, depreciation and amortization, which could put a stress on its covenant package in the forthcoming quarters.
Tata Steel UK has performed strongly in 2008-09 and has met all its covenant obligations to date and has a strong liquidity position at the yearend, the statement added.
Tata Steel acquired Anglo Dutch steel maker Corus in 2007 for $12 billion.
Shares of Tata Steel closed 1.4 per cent higher at Rs 275.45 on the Bombay Stock Exchange on Tuesday when SENSEX jumped more than 4%.
Officials of Tata Steel UK, a fully-owned subsidiary of the world’s sixth largest steel maker, have held meetings with bankers who helped raise the funds for the Corus acquisition.
Tata Steel has not sought any additional funding or requested a re-scheduling of its debt servicing obligations.
Instead, as part of the fresh terms, the company is voluntarily pre-paying over £200 million of the non-recourse debt as it tries to de-leverage its European operations.
The debt payback would be funded through additional support from Tata Steel Ltd, which continues to have a significant liquidity buffer. Tata Steel UK has appointed Citigroup, Royal Bank of Scotland and Standard Chartered as the coordinating banks to facilitate the process.
The company has informed its lenders that it has taken significant steps to restructure its operations and reduce costs to weather the downturn.
While this would enable the company to emerge stronger with improved profitability in the future, in the near term there could be an adverse impact on its earnings before interest, tax, depreciation and amortization, which could put a stress on its covenant package in the forthcoming quarters.
Tata Steel UK has performed strongly in 2008-09 and has met all its covenant obligations to date and has a strong liquidity position at the yearend, the statement added.
Tata Steel acquired Anglo Dutch steel maker Corus in 2007 for $12 billion.
Shares of Tata Steel closed 1.4 per cent higher at Rs 275.45 on the Bombay Stock Exchange on Tuesday when SENSEX jumped more than 4%.
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