Jindal Steel raises Rs 660 cr bridge loan for CIC buy
Firm seeks to replace this one-year assistance with 5-yr loans
Jindal Steel has raised a bridge loan of Rs 660 crore to fund its CIC Energy acquisition.
The company raised Rs 550 crore from Deutsche Bank and Rs 110 crore from First Rand Bank of South Africa for one year term. Bridge loans are short term financing which the companies go for to fund any immediate need of money. These loans are then replaced by longer term borrowings.
Sushil Maroo, director (finance), Jindal Steel and Power said, “We had to raise this money immediately hence went for the bridge loan. Now we will look to replace this for a 5-year loan.”
The loan has been raised at 1.9 per cent over LIBOR. The company said, “this is the most competitive rate given the current market scenario.”
Maroo said that the company may look at a fresh set of banks if these two banks do not cosy up to reworking these loans to a 5-year term.
The loan has been raised by Jindal Steel and Power (Mauritius) Ltd, the subsidiary of JSPL that has acquired CIC Energy of Canada.
Earlier this month, Jindal Steel said that it has acquired CIC Energy for Rs 600 crore through its subsidiary Jindal BVI Ltd (JBVI). JBVI and CIC Energy will now be merged and CIC will be delisted from the Canadian stock market.
CIC has proven coal reserves of 2.4 billion in Botswana, Africa and expected reserves of 6 billion tonne.