New Delhi: As part of a restructuring exercise, Tata Steel UK on Tuesday informed its lenders that it would prepay at least £200 million (around Rs1,500 crore) of its debt.
The prepayment would be funded through additional support from Tata Steel Ltd, which has a significant liquidity buffer, the company said in a statement
“The company will prepay, voluntarily, over £200 million of the non-recourse debt to continue its objective of deleveraging its European operations,” the statement said.
Layoffs loom: The Corus Redcar steel plant in Cleveland, UK. Corus may shut a plant in Teesside, UK, threatening around 10,000 jobs. Mark Pinder / Bloomberg
Non-recourse debt is a secured loan that is availed of by pledging collateral, but there is no personal liability on the part of the borrower.
Tata Steel UK has appointed Citigroup Inc., Royal Bank of Scotland Plc. and Standard Chartered Bank as coordinating banks to facilitate the process.
The banks, with significant interest in the debt, have expressed strong support towards the covenant reset proposal, Tata Steel said.
The company said it has not sought any additional funding as it has sufficient liquidity for its operations.
Meanwhile, a report in a UK daily said nearly 10,000 jobs in the country could be under threat as Tata Steel Ltd’s European arm Corus Plc. weighs closing one of its mills after a group of buyers terminated a contract to buy 80% of the unit’s production for 10 years.
“Not only did the consortium’s decision spell the end for an estimated 3,000 steel workers in the area, but a further 7,000 jobs in the supply train are also threatened,” the ‘Daily Mail’ newspaper reported in its online edition. Corus did not respond to an email query sent to it.
However, a senior company official said that direct and indirect job losses are imminent with closure of industrial operations, though he did not confirm any figure.
The official, who didn’t want to be named, added that Corus is looking at legal options to avert the closure of its Teesside Cast Product unit in north-eastern England after the consortium of buyers backtracked from the deal.