Tata Steel May Refinance About $900 Million Raised for Corus Buy

MUMBAI -- Tata Steel Ltd. may refinance around $900 million that it had raised to partly fund its acquisition of Anglo-Dutch steel maker Corus in 2007, a person familiar with the matter said Thursday.

"The company is yet to decide on the modalities of the refinancing," the person told Dow Jones Newswires, asking not to be named.

Tata Steel - the world's eighth-largest steel maker by output - had raised $875 million via a foreign currency convertible alternative reference securities offering, or CARS, for its $12 billion Corus acquisition.

The CARS expires in 2012, the person added.

At the time of issuance in 2007, the Tata Group company had said that the CARS will be convertible into either qualifying securities or ordinary shares at an initial conversion price of 876.6225 rupees ($18.225) a share.

The Indian steel maker has earlier also restructured or refinanced its borrowings for the Corus buy. In May this year, Tata Steel U.K. received lenders' approval to reset the covenants on its GBP3.7 billion debt.

"It (the refinancing) is an ongoing process, and the company will have to keep doing it to reduce its finance costs," Sanjay Jain, an analyst with brokerage Motilal Oswal, said by phone.

As of June 30, Tata Steel had a consolidated net debt of 491.70 billion rupees, with cash and cash equivalent of $2.24 billion.

Separately, the person familiar with the matter said that Tata Steel has identified a coal mine in Mozambique and an iron ore mine in Canada for acquisitions.

"The company is likely to spend about $300 million-$400 million on each buy," the person said.

The two acquisitions will be used to provide raw materials for the company's internal consumption, he said, without elaborating.