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Tata Steel UK gets consent to reset debt covenants

MUMBAI: Tata Steel UK, a 100 per cent indirect subsidiary of Tata Steel, has received lenders’ approval to reset the covenants in its £3.7 billion acquisition-related senior debt facility with the lenders having voted in favour of the company’s proposal.

As part of the agreement reached with the banks, testing of the facility’s earnings-related covenants will largely be suspended till March 2010 and will then resume with significantly higher flexibility. As part of the package, Tata Steel will inject £425 million into Tata Steel UK in a phased manner, of which around £200 million will be used to prepay debt and de-leverage the European balance sheet.

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