Mumbai: JSW Ispat Steel Ltd has signed a deal to refinance Rs6,150 crore ($1.4 billion) of debt, enabling it to exit from a corporate debt restructuring programme, two sources with direct knowledge of the mattersaid.
The steelmaker was taken over by JSW Steel last year after it ran up big losses. It posted a net loss of Rs74o crore for the six months ended last December and held debt of Rs 7,157 crore.
“It (JSW Steel) did not go for refinancing the full debt because it posted good operating margins, good results. So, they will make up for the remaining through internal accruals now,” one of the two sources told Reuters on Tuesday.
India’s No. 3 JSW Steel, in which Japan’s JFE Holdings owns 14.8%, had bought a controlling stake in Ispat for $476 million to expand its operations and is poised to become the country’s No. 1 steelmaker once its full capacity comes on stream.
For the three months ended June, JSW posted a 58% rise in consolidated net profit, and said it expects to achieve sales of 9 million tonnes in fiscal year 2012, even as it forecast margins to be under pressure.
In contrast, the country’s largest steel producer Steel Authority of India posted a 29% fall in quarterly net profit.
The $500 billion global steel industry has faced softer demand in the past few months, mainly from the construction and automobile sectors, and outlook for the rest of the year has been mixed.
JSW Ispat, which posted losses in its fiscal years 2009 and 2010, netted a profit of more than Rs700 million in the March quarter.
It was formerly controlled by the brothers of billionaire Lakshmi Mittal, who heads the world’s largest steelmaker ArcelorMittal . Mittal branched out on his own in 1976 due to differences with the family.
SBI Capital Markets, a unit of State Bank of India, and Bank of India are arrangers to the deal, the sources said.
Company officials declined to comment immediately.
Shares of JSW Ispat, which have lost more than a quarter of their value so far in 2011, reversed losses after Reuters reported the news of the refinancing and rose as much as 2.6%.
They provisionally closed 1.45% higher at Rs17.45 in a weak Mumbai market.