Kolkata, March 9, 2005 :
Tata Tea Limited today announced the successful
closure of the refinance of entire debt that was outstanding
in Tata Tea (GB) Ltd, the SPV that holds 100% equity of
the Tetley Group Ltd., UK. As a result, the residual debt
outstanding, as on February 4, 2005, out of the first refinance
that was concluded in February 2003 has been fully paid
off and replaced by a fresh more cost effective debt. The
loan has been jointly arranged by Rabo Bank India and Rabo
Bank International, London with the latter underwriting
the facility.
The debt retired had initially aggregated to
£ 184 million (Rs.1527 crores), the weighted average
interest of which approximated to 2.95% p.a plus LIBOR.
The refinanced debt of Tata Tea (GB) Ltd now concluded is
for £ 160 million (Rs.1328 crores) at an average interest
margin of 1.40 % p.a plus LIBOR..
The structure affords additional interest savings
due to a downward margin ratchet which is based on future
improvement in debt leverage of the business, going forward.
Annual saving in interest cost is expected to be around
£ 2.75 million (Rs.23 crores). In accordance with
FRS 4 of UK GAAP, there would be a one time non cash charge
of £ 2.2 million approximately, on post tax basis,
arising from write off of refinancing costs from the earlier
refinance. The term component amounting to £ 75 million
(Rs.623 crores), is subject to bi-annual repayment and the
entire debt facility is for a term of 5 years.
In line with the management expectation, the
leveraged debt structure based on which the acquisition
of The Tetley Group Ltd. was concluded in March 2000, has
been successfully and progressively whittled down from a
high debt equity ratio of 3:1 to 1.8:1 in February 2003
and is now down to 1.6:1.
The successive refinancing initiatives have
allowed significant improvement in the Tetley Group's cash
flows which would enable the company to invest behind its
brand globally, launch new products and consolidate its
market shares in key geographies, together with an ability
to launch the brand in emerging markets.
