Usha Martin hopes to close the sale of steel business to Tata in 3 months

tata steelUsha Martin expects to close the sale of its steel business to Tata Steel over the next 2-3 months. The Rs 45.20 billion deal would be used to repay the entire debt of Usha Martin.“There has been zero sacrifice from any lender. We are paying them the full principal and the company is ensuring that there is no haircut,” Rajeev Jhawar, managing director, told shareholders at the extraordinary general meeting (EGM) where approval was sought for the deal.At June end, Usha Martin’s debt stood at Rs 47 billion. The residual debt on the Usha Martin balance sheet would be just working capital of Rs 3-4 billion.Rohit Nanda, chief financial officer said that the India business of the wire and wire ropes had an EBIDTA of Rs 2 billion and including the international business, it was at Rs 2.5 billion. The wire and wire ropes business accounted for around 40 per cent of Usha Martin.The amount would be in an escrow account with the State Bank of India, which is the lead bank.“First all the lenders, both of the long term debt and working capital, will be paid off. The residual business, the wire ropes business, will have the working capital without any long-term debt and that should help us grow the business which is doing reasonably well and is expected to grow.Investments required in wire ropes business are significantly lower than what a steel asset requires,” Jhawar explained.Tata Steel has already sought Competition Commission of India’s (CCI) approval for the deal. Once the CCI approval is received, the process for transfer of mines would start, said Jhawar on the sidelines of the meeting. However, the entire process is expected to be completed in 2-3 months.
Source: Business Standard