Rabobank to handle Tata Tea buyout

By Our Staff Correspondent

MUMBAI, FEB. 28. Rabobank International has been appointed as the sole lead manager/arranger for the entire leveraged debt financing package of 181 million pound sterling for the acquisition of Tetley Group by Tata Tea. In addition, an amount of 35 million pounds has also been provided to cater to the need- based growth requirements of the acquired company. This deal is the largest ever cross border acquisition in India's corporate history.

The deal has been structured as a LBO (leveraged buyout) and will be financed by 70 million pounds equity injection by the Tatas and 215 million pounds multi-tranche financing package (includes 35 million pounds for future financing commitment) structured by Rabo India Finance along with Rabobank International offices in London and Holland.

Rabobank, the Triple A Dutch financial institution, was appointed as strategic and financial advisor in September 1999 to advise the Tatas on the transaction and has been instrumental in performing a valuation of the business, co-ordinating the four- month long due diligence exercise on Tetley in the U.K. and the U.S. and in fully structuring the acquisition financing package for this deal.

Upon Tata Tea successfully concluding an agreement with the sellers, Rabobank has uniquely structured a package comprising tranches. The uses of the 305 million pounds would constitute the acquisition cost of 271 million pounds and 34 million pounds as post acquisition working capital and capex requirements.

Of the equity portion of the sources of funds constituting 70 million pounds, Tata Tea's GDR would contribute 45 million pounds, Tata Tea's internal accruals would constitute 15 million pounds and Tata Tea Inc. of the U.S. would contribute 10 million pounds.

Of the debt portion of 201 million pounds, senior debt arranged by Rabo amounts to 131 million pounds, mezzanine debt/loan stock arranged by Rabo amounts to 50 million pounds and Vendor loan amounting to 20 million pounds.

Together, the equity and debt portion constitute total acquisition funding of 271 million pounds.

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Section  : Business
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