Friday, October 27, 2006

Who is financing India's largest LBO; Tata Steel-Corus deal

Financeasia has an insight into how India's biggest ever leveraged buyout, Tata Steel's takeover of the UK-based Corus Steel, was financed. An excerpt from the article:

The financing package accompanying Tata Steel's $8.23 billion leveraged buyout of UK steel producer Corus is multi-faceted. The deal, which sees Tata assume some debt on the Corus balance sheet and agreed pension liabilities, comprises a $3.88 billion equity contribution from Tata Steel, a fully underwritten non-recourse debt package of $5.63 billion, and a revolving credit facility of $669 million. The deal represents India’s largest cross-border outbound acquisition ever and also the largest leveraged buyout (LBO) attempted by an Indian company.

Tata Steel appointed ABN AMRO and Deutsche Bank to advise on the transaction and raise the required financing for the acquisition. But somewhere along the way, the appointed banks were unable to commit the debt required. Sources close to the deal suggest the transaction was almost derailed at this stage.

So Corus turned to a bank it was close to, Credit Suisse, to resolve the impasse. Credit Suisse was advising Corus on the Tata deal.

Read the full article here.

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