News & Media

JSW steel seeks $1.5bWar Chest

Feb 15, 2018
  • Published by : The Economic Times
  • Author(s) : Babu Sivaprakasam
  • MUMBAI : JSW SteelNSE -0.88 %, the country’s most profitable major steel producer, plans to raise $1.5 billion, or about Rs 9,620 crore, through overseas borrowings as it looks to buy stressed assets in the industry, multiple sources familiar with the matter told ET.

    The company is in discussions with investment bankers on whether to go for dollar-denominated bonds or syndicated loans, or a combination of both, they said.

    The company has spoken with at least eight foreign banks,” said one of the persons. To start with, JSW Steel may just borrow about $400 million, or about Rs 2,565 crore, via overseas syndicated loans, sources said. Citi Bank has already been approached for the same, and JSW Steel is now looking to rope in another two or three banks, they said. Both JSW and Citi declined to comment on the matter.

    Foreign banks that the company is in talks with want to assess the pricing part of the proposed bond issue, said the person quoted earlier. “With fluctuation in US Treasury yield, the company is buying time to finalise the issuance,” the person said.

    It also depends on how JSW manages to emerge successful bidder to acquire those companies.

    JSW Steel is in the race to acquire assets of Monnet IspatNSE -2.20 % and Bhushan SteelNSE -1.29 %, which are being sold in accordance with the Insolvency and Bankruptcy Code. For Monnet Ispat, JSW Steel’s combine with Aion Capital has emerged the only bidder. JSW group is also seen as a potential bidder for many other stressed steel companies.

    “There are sophisticated and strategic set of investors globally for stressed assets,” said Babu Sivaprakasam, partner at legal process outsourcing company Economic Laws Practice.“Large corporates that are bidding big time under IBC resolution process need to raise funds to support their proposed acquisitions,” he added. “Such funding may be either through dollar-bonds or overseas syndicated loans, though it can come in through ECB (external commercial borrowing) or FDI (foreign direct investment) route only,” Sivaprakasam said.

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