Kolkata: Tata Steel, the world’s No. 7 steelmaker, is in talks with banks to raise between $4.5 billion to $5.5 billion loan to refinance debt at its European unit Corus, its managing director said on Wednesday.
“We are in talks with bankers for refinancing our European loans,” H.M. Nerurkar told reporters.
The company had said last month it was looking to refinance existing debt based on the extension of the period and flexibility of terms. It had reported net debt of $9.5 billion at the end of the June quarter.
Nerurkar did not name or quantify the banks with which the company was in talks and also did not specify any timeframe.
Last month, Tata Steel lagged market estimates for its June quarter profits and said it expected industry fundamentals to remain cautious in the second half of the 2010-11 financial year.
Tata Steel’s European operations account for two-thirds of its global capacity of about 30 million tonnes, while the Indian operations contribute a quarter. It also has units in South East Asia and Africa.
Denies sale in South Africa
Nerurkar denied media reports on Tuesday that Tata Steel was considering selling assets at its South African unit Tata Steel KZN, which it set up in 2006.
“We have no plans whatsoever to sell the South African assets,” he told reporters. “We are currently looking at stabilising the operations there and scouting for ferro chrome mines for securing raw material sources.”
The South African plant, which has an annual capacity of 150,000 tonnes, produces high carbon ferrochrome and charge chrome.
The company also expects to start work on a greenfield plant at Orissa in eastern India, by October, Nerurkar said.
Tata Steel plans to set up a 6 million tonnes steel plant at Kalinganagar in Orissa, and has already placed orders for equipment and services for the project.
Shares in Tata Steel pared losses after the news of the fundraising. At 0703 GMT, the stock was trading at Rs580, up 0.6% in a Mumbai market up 0.2%.