Washington, D.C., June 10, 2005
- The International Finance Corporation, the private sector arm of the World Bank Group, has signed a $300 million loan agreement with Tata Iron and Steel Company Limited. IFC’s financing will help support Tata Steel’s modernization and expansion program, including a capacity increase in its plant in Jamshedpur in Jharkhand state, India.
Earlier this year, Tata Steel announced the acquisition of NatSteel Asia, a Singapore-based company with operations in Australia, China, Malaysia, the Philippines, Thailand, and Vietnam. The overall investment program constitutes a significant step toward Tata Steel’s becoming a global producer with production of 15 million tons a year.
Established in 1907, Tata Steel is India’s largest integrated private sector steel manufacturer with a workforce of over 40,000. It manufactures a wide range of flat and long steel products at its facilities in Jamshedpur.
IFC will provide the company with a corporate loan of $300 million, which includes a syndicated loan of $200 million. The syndicated loan is expected to be underwritten by Bank of America, N.A.; Caylon; the Hongkong and Shanghai Banking Corporation Limited; and Standard Chartered Bank.
Iyad Malas, IFC’s director for South Asia, said, “This is an excellent example of IFC’s support for a world-class company in a key industry in the Indian economy. IFC is pleased to be associated with Tata Steel, particularly because of its leadership role in, and commitment to, sound environmental and corporate social responsibility practices. We are impressed by the company’s contribution to the development of the state of Jharkhand as well as the well-being of the communities surrounding its facilities.”
B. Muthuraman, Tata Steel’s managing director, said, “The IFC loan is an important part of Tata Steel’s future financing strategy. It will help us diversify our sources of the long-term funding essential to our efforts to establish an international presence while maintaining our position in India.”
Dimitris Tsitsiragos, IFC’s director of global manufacturing and services, added, “Our involvement in this project is instrumental in supporting the South-South investment strategy of Tata Steel, one of the world’s lowest cost steel producers. This cross-border transaction will set a benchmark for long-term borrowings of leading Indian corporates in the international financial markets. We look forward to our future cooperation with Tata Steel as it explores other opportunities to further increase its participation in the global economy.”
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
