The deal comprises a cash consideration of 4,094 crores to UML
Tata Sponge Iron Ltd. (TSIL), a Tata Steel subsidiary, has announced the completion of its acquisition of the steel business of Usha Martin Ltd.
In a regulatory filing, TSIL said it completed the acquisition on April 9, including UML’s steel business undertaking and captive power plants.
This is after a cash consideration of 4,094 crores payable to UML (after adjustment for negative working capital and debt-like items). It is subject to further holdbacks of 640 crores, pending the transfer of some of the assets, including mines and certain land parcels, TSIL said. Tata Steel announced in a stock exchange disclosure on September 22, 2018, the signing of definitive agreements to buy UML’s steel business. The acquisition cost was then pegged at between 4,300 and 4,700 crore. TSIL came into the picture by announcing its entry into the steel business as part of a long-term plan. As its promoter shareholder, Tata Steel identified it as the appropriate entity to acquire UML’s steel business. The acquired business comprises a one million tonne per annum (mtpa) alloy-based long products-making facility in Jamshedpur, an operational iron ore mine, a coal mine under development, and captive power plants.
UML’s steel business has a rich mix of carbon and alloy steel, catering to the automotive sector and high-end wire-rod makers.
The TSIL board had already approved a plan to finance the buy through the issue of rights shares up to 1800 crore, external borrowings up to 2500 crore, and the issue of non-convertible redeemable preference shares of 1,000 crores. TSIL is debt-free, with free cash reserves of about 670 crores.
