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Tata Steel set to raise Rs 10,000 crore debt

10 May 2010 Evaluate

Tata Steel, the world’s eighth-largest steelmaker, will raise Rs 10,000 crore of debt to finance its 3 million tonne expansion in Jamshedpur and to part-pay debt at Corus Plc, its UK business. The company may do so in a month or two.

 

The money will be raised in two tranches — of Rs 4,000 crore and Rs 6,000 crore. The first tranche of Rs 4,000 crore will be raised through a 15-year bond with an annualised coupon of 10.5%.

 

The company plans to invest Rs 13,000 crore in all to take its total production capacity to 10 million tonne by September 2011. The facility’s current capacity is 6.8 million tonne. The total debt requirement is Rs 7,800 crore. Tata Steel may use the balance Rs 2,200 that will be raised to reduce debt at Corus.

 

Though the steelmaker has no debt payment obligation till December 2010, it has to pay 3.2 billion pounds (about Rs 21,400 crore) between June 2012 and 2014. The group’s net debt at the end of December 2009 stood at Rs 50,921 crore.

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