Tata Power refinances bridge loan taken for acquisition of 30 per cent stake in Indonesian coal miners Kaltim, Arutmin
29 Apr 2008
Tata Power Company Ltd has refinanced $850 million of the $950 million bridge loan it had taken for the acquisition of 30 per cent equity stakes in Indonesian thermal coal producers, PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia (Arutmin), as well as related trading companies owned by PT Bumi Resources Tbk.
The $950 million bridge loan had a tenor of one year of which $850 million is being refinanced with long-term loans. The refinancing consists of a non- recourse $580 million facility with a door-to-door tenor of six years and a $270 million facility with recourse to the company. The recourse facility has a door-to-door tenor of seven years.
Tata power says it will evaluate the option of refinancing the balance $100 million of the bridge loan "at an appropriate time within the residual bridge loan tenor".
Tata Power said the pricing on the facilities is competitive for loans of such nature. The financing has been provided by a group of banks led by five mandated lead arrangers including Barclays Capital, Bank of India, ICICI Bank State Bank of India and Sumitomo Mitsui Banking Corporation.
In March 2007 Tata Power Co had signed a $1.3-billion deal to buy stakes in Indonesian PT Bumi Resources Tbk's two coalmines, controlled by the family of Indonesia's chief social welfare minister Aburizal Bakrie. The deal will be funded through a combination of debt and internal accruals. (See: Tata Power to acquire 30-per cent stake in $1.3-billion Indonesian coal mines)
"We are happy to refinance the bridge loan at competitive pricing in such challenging financial markets," said Prasad R Menon, managing director Tata Power. "The rising coal prices in the international market reinforce our belief that our investment in Indonesian coal companies is timely and pragmatic".
KPC and Arutmin are together among the top three largest exporting thermal coal mines in the world and have excellent co export infrastructure. Moreover, they are strategically well placed to act as a source of supply for increasing regional demand. Together the two produced approximately 54.2 MT of coal in 2007.
Tata Power says the coal companies are ''world class assets and have enjoyed robust financial performance recently given rising production volumes and the increases in coal prices." It added that fast growing regional demand for thermal coal coupled with supply constraints among exporting countries has led to sharply higher coal prices.
