Tata Steel on Tuesday said it would raise ₹16,500 crore through debt instruments to fund the ₹35,200 crore acquisition of Bhushan Steel Ltd. (BSL).
The remaining amount will be raised through internal resources, it said.
The banks, according to industry experts, are expected to take a whopping haircut of about 30-35% in the sale of BSL to an arm of Tata Steel. However, Tata Steel refused to comment on the haircut taken by banks and financial institutions.
“We will be paying a total consideration of ₹35,200 crores. This is expected to give us about 72.65% equity in the company and close to 100% of economic interest in the company because of the way in which the transaction has been structured,” Tata Steel told PTI in an e-mailed response.
From a financing perspective, it said, the transaction was largely financed by “our cash, and incremental debt is only about ₹16,500 crore which will be raised on the target balance sheet eventually.”
The company said Bhushan Steel would have about ₹16,500 crore of secured debt and it would be contributing a significant amount of its own capital into the BSL. “We believe that with synergies getting realised over a period of time, we have a good match between the earnings capability of the entire facilities and assets and the capital structure that we are putting in,” it said.
