Business   

Tata Tea refinances £ 174 m Tetley debt

By Our Special Correspondent

MUMBAI, MARCH 7. The management of Tata Tea has announced the successful refinance of the entire debt that was outstanding in Tata Tea (GB) Ltd., the special purpose vehicle that holds 100 per cent equity of The Tetley Group, U.K. Resultantly, the residual debt outstanding as on February 28, out of the original debt that was raised in March 2000 at the time of the acquisition, has been fully paid off and replaced by a fresh cost effective new debt.

The debt retired comprised £ 114 million of senior debt, £ 49 million of mezzanine debt and £ 8 million of a secured loan stock debt. The weighted average interest cost of the retired debt was about 10.22 per cent per annum.

The refinanced debt of Tata Tea (GB) is for £ 174 million, which has been co-arranged by RaboBank International together with the Royal Bank of Scotland. The new debt comprises three tranches, all senior, of which the tranche A is for £ 90 million and subject to a bi-annual repayment over seven years.

The balance two tranches of £ 42 million each are subject to a bullet repayment between seventh and ninth years. The refinanced debt is expected to cost an average interest rate of 6.70 per cent per annum. Resultantly, The Tetley Group is now expected to accrue a saving in its interest cost in the region of £ 6 million annually.

In a notice to stock exchanges, the company stated that the new debt raised is fully securitised by the global assets and cash flows of the Tetley Group and the lenders have no recourse on Tata Tea, in line with the original arrangement.

It may be recalled that at the time of acquisition of The Tetley Group in March 2000, the financing was highly leveraged with the debt-equity of Tata Tea (GB) being 3:1. Over the last three years, the company has taken various initiatives to work the debt down that has helped reduce TTGB's debt equity to 1.7:1 at this point in time. The management expects the leveraged debt structure to be progressively worked down and for the company to be in a position to switch over to a traditional corporate debt structure in the foreseeable future.

With this initiatives, Tata Tea today stated that it is quite clear that The Tetley Group's cash flow will improve significantly to enable the company to invest behind its brand globally, launch new products and consolidate its market shares in key geographies together with an ability to launch the brand in emerging markets.

Printer friendly page  
Send this article to Friends by E-Mail

Business

News: Front Page | National | Southern States | Other States | International | Opinion | Business | Sport | Miscellaneous |
Advts: Classifieds | Employment | Obituary |

Stories in this Section

• Tata Tea refinances £ 174 m Tetley debt
• New pension, health schemes get Rs. 100 cr.
• Budget 2003 — Signalling a lower interest rate regime
• Ashok Leyland sells more in Feb.
• Nervousness grips market
• Sundaram Brake's efforts to go asbestos-free
• Iran may resume tea imports
• Honda to make Indian arm export hub
• War fears take fresh toll on rupee
• New technology for radiators
• Stock Market Index
• Exchange rates
• Bullion rates
• Nestle net up 16 p.c.
• Acer to bundle Epson printer, Britannica
• VA Tech's expansion

Copyright © 2003, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu