Tata Steel Bolsters Financial Resilience with Acquisition in T Steel Holdings Pte. Ltd

In a move designed to strengthen its financial position and support strategic growth initiatives, Tata Steel Limited announced a significant capital infusion plan for its wholly-owned foreign subsidiary, T Steel Holdings Pte. Ltd (TSHP). This multifaceted strategy combines equity subscription and debt restructuring to enhance Tata Steel’s long-term financial resilience.

Capital Injection for Strategic Objectives

The Board of Directors of Tata Steel has approved a proposal to infuse funds of up to USD 2.11 billion (approximately ₹17,407.50 crore) into TSHP during the current fiscal year (FY 2024-25). This capital infusion will be provided through equity subscription in one or more tranches, offering Tata Steel greater control over its financial resources.

Targeted Utilisation of Funds

The funds injected into TSHP will be strategically allocated to achieve two key objectives:

• Debt Repayment in Offshore Subsidiaries: A portion of the capital will be directed to repay external debt incurred by Tata Steel’s offshore subsidiaries. This will help to streamline the company’s overall debt structure and reduce interest expenses.
• Supporting Restructuring Costs in Tata Steel UK Limited: Additional funds will be used to support the restructuring costs associated with Tata Steel UK Limited, a wholly-owned subsidiary facing market challenges. This investment aims to position the UK operations for future success.

Debt Conversion for Enhanced Financial Flexibility

In addition to the equity infusion, the Board has also approved the conversion of existing debt instruments totalling USD 565 million (approximately ₹4,661.25 crore) held by Tata Steel in TSHP into equity shares. This conversion further strengthens Tata Steel’s financial position and allows the company to manage its debt profile more effectively.

Maintaining Control and Transparency

Tata Steel emphasises that both the equity subscription and debt conversion will be completed during the current fiscal year. Importantly, following these transactions, Tata Steel will continue to hold a 100% ownership stake in TSHP, ensuring complete control over the subsidiary. This commitment to transparency underscores Tata Steel’s responsible approach to financial management.

By implementing this comprehensive strategy, Tata Steel demonstrates its proactive approach to bolstering its financial stability and fostering sustainable growth for its international operations. This capital infusion and debt restructuring pave the way for Tata Steel to navigate current market conditions and emerge as a stronger competitor in the global steel industry.

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