Tata Sponge Iron Ltd. (TSIL), a Tata Steel subsidiary, has announced the completion of its acquisition of the steel business of Usha Martin Ltd.
In a regulatory filing, TSIL said that it completed the acquisition on April 9, which included UML’s steel business undertaking along with captive power plants.
This, after a cash consideration of ₹4,094 crore payable to UML (after adjustment for negative working capital and debt-like items). It is subject to further holdbacks of ₹640 crore, pending transfer of some of the assets including mines and certain land parcels, TSIL said. Tata Steel had announced in a stock exchange disclosure on September 22, 2018, the signing of definitive agreements to buy UML’s steel business. The acquisition cost was then pegged at between ₹4,300 and ₹4,700 crore. TSIL came into the picture through an announcement of its entry into steel business as part of a long-term plan. Tata Steel, as its promoter shareholder, identified it as the appropriate entity to acquire UML’s steel business. The acquired business comprises a one million tonne per annum (mtpa) alloy-based long products making facility in Jamshedpur, an operational iron ore mine, a coal mine under development, and captive power plants.
UML’s steel business has a rich mix of carbon steel and alloy steel, catering to the automotive sector as well as high end wire-rod makers.
The TSIL board had already approved a plan to finance the buy through issue of rights share up to ₹1800 crore, external borrowings up to ₹2500 crore and issue of non-convertible redeemable preference shares of ₹1,000 crore. TSIL is debt-free with free cash reserves of about ₹670 crore.
