Tata Steel hums a new tune on Corus

MUMBAI: Tata Steel said on Monday that it will increase the size of its contribution to the purchase of Corus by about $800 million to $7.4 billion in order to cover some extra costs and take on the working capital of the Anglo-Dutch steel maker.

Mumbai-based Tata Steel, which became the world’s fifth-biggest steel company following the Corus purchase, said it will increase the size of its proposed convertible preference share issue to about Rs 6,000 crore from the earlier Rs 4,350 crore. It will raise the remaining amount through a GDR or an ADS.

Tata Steel announced the acquisition of Corus in April for a net acquisition value of about $12.9 billion. This was to be funded by Tata Steel UK’s debt of about $6.14 billion, and equity contributions from Tata Steel India and Tata Steel, Asia, a 100% subsidiary of the Indian company.

But the acquisition amount of $12.9 billion referred to the value of what was being paid for and did not include the continuing debt (working capital) of Corus. After the acquisition, the enterprise value, including all the debt and the costs, is estimated at about $13.7 billion.

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