Hong Kong: India’s largest aluminium producer, Hindalco Industries Ltd, has raised $982 million (Rs4,694 crore) in a foreign currency loan and used it to clear the bridge loan taken for its 2007 acquisition of Canadian firm Novelis Inc., a senior official said.
The five-year loan was raised at 315 basis points above the London inter bank offered rate, or Libor, chief financial officer S. Talukdar told ‘Reuters’ on Friday. The company had taken a $3.03 billion bridge loan at a rate of 80 basis points over Libor to fund the deal last year. The bridge loan was fully repaid on Thursday, he said.
Raising money: Hindalco’s managing director Debu Bhattacharya. A group of 11 banks have refinanced the firm’s acquisition of Novelis. Bloomberg
“The financial markets have changed greatly. Right now a paper like this is trading at Libor plus at least 800 basis points, if not 1,000,” Talukdar said.
Hindalco had raised about Rs4,400 crore through a rights issue last month, Talukdar said, although much of that had to be covered by the firm’s founders and underwriters after falling stocks prices undermined investor interest. It also had about Rs5,300 crore of funds from its treasury operations, he said.
ABN Amro Holding NV, Barclays Capital, Bank of America Corp., Bank of Tokyo-Mitsubishi UFJ Ltd, Calyon, Citigroup Inc., Deutsche Bank AG, HSBC Holdings Plc., Mizuho Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Rabobank Groep NV arranged the five-year loan, two people involved in the deal told ‘Bloomberg’, on condition of anonymity.
Hindalco paid $6 billion for Atlanta-based Novelis last year to gain a fifth of the high-end aluminium market and access to US customers including Coca-Cola Co.
Novelis, spun off from Alcan Inc. in 2005 to ease antitrust concerns, controls 19% of the world’s flat-rolled aluminium products and supplies companies including Ford Motor Co., Eastman Kodak Co. and ThyssenKrupp AG, according to its website. Hindalco’s new loan was reduced from $1 billion after the global credit crisis curbed banks’ appetite for corporate lending, the people said.
(Patricia Kuo of Bloomberg contributed to this story.)