Tata Steel angling for £3.5b loan

Mumbai: Tata Steel, India's biggest producer of the alloy, is in talks with banks for £3.5 billion (Dh19.7 billion) in loans for its UK unit, four people with direct knowledge of the matter said.

BNP Paribas, Credit Agricole CIB, HSBC Holdings and Royal Bank of Scotland Group are among 11 banks that may lend £2.5 billion over five years, the people said, declining to be identified before an official announcement.

Citigroup., Deutsche Bank, Standard Chartered and ING Vysya Bank. may also provide funds, one of the sources said.

State Bank of India may arrange a £1 billion loan over seven years, the source said.

Tata Steel Chief Financial Officer Koushik Chatterjee said on August 12 the Mumbai-based steelmaker plans to refinance as much as $6.5 billion (Dh23 billion) of long-term debt.

Acquisitions

The company took the loans to fund its $12.9 billion acquisition of Corus Group in 2007, just before the global economic slump pared demand for steel and caused banks to curtail lending.

Chatterjee didn't answer calls to his mobile phone or reply to an e-mail seeking comment. Officials at Tata Steel and the banks didn't immediately respond to e-mailed enquiries.

The five-year loan may pay interest of about 400 basis points more than the London interbank offered rate, or Libor, the people said. A basis point is 0.01 percentage point.

The interest rate on Tata Steel's existing debt, due to be paid from 2012 to 2014, was at 210 basis points above Libor, a source said.

Tata Steel may sell $1 billion to $1.5 billion in bonds within the next year to repay a portion of the loans, they said.