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Tata Steel UK Meets with Lenders to Reset Debt Package

05/13/2009 - Tata Steel UK would prepay over £200 million of the non-recourse debt as part of its plan to reset the terms and conditions of its debt package.

Tata Steel UK has held meetings in London and Mumbai with its banking syndicate to proactively discuss the current environment and its potential future impact on covenant requirements under the company's debt package.
 
Tata Steel UK told lenders that while it had performed strongly in 2008-09, meeting all its covenant obligations to date, it has also taken significant steps to weather the downturn by restructuring operations and reducing costs. These measures have been designed to enable the company to emerge stronger with improved profitability in the future.
 
Despite its strong liquidity position at year-end, the company said that in the near term, industry conditions will likely have an adverse impact on the company’s EBITDA, which could put a stress on its covenant package in the forthcoming quarters.
 
The company is asking its banking syndicate to reset the terms and conditions of its debt package. As part of the deal, Tata Steel UK plans to prepay over £200 million of the non-recourse debt to continue its objective of de-leveraging its European operations. This would be funded through additional support from Tata Steel Ltd, which continues to have a significant liquidity buffer.
 
The company said that it has not sought any additional funding, as it still has sufficient liquidity for its operations. The company said it also has not requested any rescheduling of its debt servicing obligations, as there are no material re-payment / re-financing requirements in the near future.
 
Tata Steel UK’s banking syndicate had previously participated in the debt financing for the acquisition of Corus Group plc. The company has appointed its original Lead Arrangers, i.e. Citigroup, Royal Bank of Scotland and Standard Chartered Bank, as the Coordinating Banks to facilitate the above process. The key relationship banks with significant interest in the debt are reported to have expressed strong support toward the covenant reset proposal.
 
Tata Steel UK is a 100% indirect subsidiary of Tata Steel Ltd.