Tata Sponge Iron acquiresUsha Martin’s steel business

Tata Sponge Iron Ltd. (TSIL), a Tata Steel subsidiary, has announced the completion of its acquisition of the steel business of Usha Martin Ltd. In a regulatory filing, TSIL said that it completed the acquisition on April 9, which included UML’s steel business undertaking along with captive power plants. This, after a cash consideration of ?4,094 crore payable to UML (after adjustment for negative working capital and debt-like items). It is subject to further holdbacks of ?640 crore, pending transfer of some of the assets including mines and certain land parcels, TSIL said. Tata Steel had announced in a stock exchange disclosure on September 22, 2018, the signing of definitive agreements to buy UML’s steel business. The acquisition cost was then pegged at between ?4,300 and ?4,700 crore. TSIL came into the picture through an announcement of its entry into steel business as part of a long-term plan. Tata Steel, as its promoter shareholder, identified it as the appropriate entity to acquire UML’s steel business. The acquired business comprises a one million tonne per annum (mtpa) alloy-based long products making facility in Jamshedpur, an operational iron ore mine, a coal mine under development, and captive power plants. UML’s steel business has a rich mix of carbon steel and alloy steel, catering to the automotive sector as well as high end wire-rod makers. The TSIL board had already approved a plan to finance the buy through issue of rights share up to ?1800 crore, external borrowings up to ?2500 crore and issue of non-convertible redeemable preference shares of ?1,000 crore. TSIL is debt-free with free cash reserves of about ?670 crore.