Tata Steel BSL, formerly known as Bhushan Steel, has raised Rs 12,000 crore to refinance a bridge loan, or stop-gap credit facility, availed to fund Tata Steel’s acquisition of the Delhi-based company in the insolvency resolution process.
Axis Bank, HDFC BankNSE 0.13 % and Kotak Mahindra BankNSE 8.30 % are among the five lenders that loaned the refinancing funds, three people familiar with the matter told ET. The move would bring down interest costs and lower the overall cost of debt capital.
Axis BankNSE 0.62 % lent about Rs 7,000 crore, which the bank could sell down to other lenders. HDFC Bank extended about Rs 3,000 crore of credit, while Kotak Mahindra loaned Rs 1,000 crore, said one of the persons cited above.
Two Kerala-based banks were also parts of the consortium, advancing Rs 500 crore each.
Emails sent to individual banks remained unanswered until the publication of this report.
“The overall acquisition of Bhushan Steel of more than Rs 35,000 crore was funded through a mix of internal cash generation, shareholder funding and the balance bridge debt of Rs 16,500 crore raised in the acquisition vehicle. This bridge debt is being termed out now,” Koushik Chatterjee, Executive Director and Chief Financial Officer, Tata Steel, told ET, confirming the move. “In November, a Rs 12,000-crore facility was contracted in Tata Steel BSL from a syndicate of five banks.”
The loan is likely to have come at a 9.30% rate, with a 12-year maturity period, market sources said.
At the beginning of the year, Tata Steel emerged as the successful bidder for stressed alloy maker Bhushan Steel in the bankruptcy process. The company took a bridge loan from a group of six-seven private and foreign lenders.
Such loans were priced at 8.70%, with one-year maturity. Going by comparable rates, the latest loan looks cheaper.
On October 1, Tata Steel decided to rechristen its recently acquired asset, Bhushan Steel, as Tata Steel BSL. Tata Steel has also planned to raise the current production level at Bhushan Steel to four million tonne (mt) by March-end from 3.5 mt now.
