Tata Steel UK, the parent company of Corus Steel, has asked its bankers to ease loan terms after agreeing to pay Rs 1,500 crore (£200 million)of its non-recourse loans ahead of schedule to help reduce the debt burden in the acquisition of the Anglo-Dutch company. A non-recourse loan is secured only by the property purchased with the particular borrowed funds.
The company has held meetings in London and Mumbai with the banks that helped fund the acquisition of Corus Group plc. It said in a statement that the meetings were to “pro-actively discuss the current environment and the potential future impact on some covenant requirements under the company's debt package.”
A Tata Steel spokesman did not return calls on whether the 'covenant reset proposal' discussion included possible easier loan terms. But a group official who asked not to be identified said this would pertain to softening some conditions attached to the loan.
The company has not sought any additional funding, as it has sufficient liquidity for its operations, and, has not requested any re-scheduling of its debt servicing obligations either.
A covenant is a one-way commitment undertaken by a company. The company informed its lenders that it has taken significant steps to restructure its operations and reduce costs to weather the downturn.