Corus Secures Loan Relief

Fri, 05 Jun 2009

Corus, one of Europe’s biggest steelmakers, has secured a deal with its banks to relax its lending agreement terms.

A banking syndicate led by seven banks including Citigroup, Standard Chartered and Royal Bank of Scotland has agreed to reset the banking covenants on £3.7 billion of debt used by India’s Tata Steel in its £6.2 billion takeover of Corus in 2007.

As part of the agreement, Tata Steel UK’s Indian parent company will pump £425m into the firm to help pay off debts .

Corus chief executive Kirby Adams said the decision by the Indian board and TSUK’s lenders signalled their faith in the underlying strength of the business, despite concerns over its Teesside operations where 2,000 jobs are on the line after its top international customers cancelled contracts with the plant.

Although the moves will have no direct impact on the Cast Products plant, it could help boost commercial relations with suppliers through an improved credit profile".

Mr Adams said Corus, which has been hit hard by declining steel prices and a slump in global demand for steel, would continue its "focus on improving operating efficiency, as well as on enhancing customer relations and revenues through better product quality and service.

Tata Steel chief financial officer Koushik Chatterjee said: "The covenant resetting agreement demonstrates the strong relationship of the Tata Steel Group with its lenders and underlines the commitment of Tata Steel to its European operations."

"It is important to highlight that, despite the challenging financial environment, there will be no increase in the debt-servicing costs of Tata Steel UK."
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