CSN ready with $12 billion war chest to oust Tata's Corus bid

Rex Mathew
14 December 2006

Having gained the upper hand in the race to acquire Corus with its unexpected 515 pence per share offer, Brazilian company CSN now says it is willing to go even further. More significantly, the company claims it has enough resources to hike its offer to even 600 pence per share if Tata Steel is prepared to battle it out.

Reports quoting unnamed CSN sources claim that the company has built up a war chest of $12 billion to finance the Corus acquisition. Most of the funds are from credit lines offered by Goldman Sachs, Barclays and ING.

BNP Paribas, earlier bagged by CSN as a potential financier to the deal, has not extended any credit facilities as the French bank is rumoured to be unwilling to take the higher risk. CSN is also rumoured to be willing to dip into its own cash resources of around $2 billion, if need be, to ensure that its bid is successful.

It is as yet unclear if CSN's bankers are also willing to back the company for a higher bid for Corus. More debt to finance the acquisition would strain CSN as it already has some amount of debt in its books, unlike Tata Steel, which is debt-free.

Media reports indicate that Tata Steel has not yet decided to walk away from the deal and is working hard on a higher bid. The company has reportedly hired influential investment bank Rothschild as an advisor and analysts now expect a bid in the region of 530 to 550 pence per share of Corus.

For Corus, being acquired by either Tata Steel or CSN would mean a highly leveraged future.