Tata Steel will pre-pay £200m to recast debt

 Tata Steel Ltd, the world’s sixth-largest steel producer, on Tuesday said its subsidiary, Tata Steel UK, has asked its lenders to reset the terms of the debt it took to buy Corus. As part of the deal, Tata Steel will “voluntarily prepay” £200 million, or roughly Rs 1,500 crore, of this non-recourse loan to reduce the debt overhang on its European operations as its arm battles the downturn in the European steel industry. The $12.1-billion (£6.2-billion) Corus acquisition was financed by an $8-billion debt raised by Tata Steel UK from a consortium of lenders. In a release, Tata Steel said it has not sought any additional funding since it has sufficient liquidity to run its operations, and, “has not requested any re-scheduling of its debt servicing obligations, as there are no material re-payment or re-financing requirements in the near future.” While announcing its Q3 results earlier, Tata Steel had said it had no repayment obligation till December 2009 in Tata Steel UK. It had also said it would prepay $450-million debt of Tata Steel UK in FY2010.