JSW Steel has dropped plan to raise $275 million (about Rs 1,375 crore) through external commercial borrowing (ECB) as it has not received regulatory approval.
“Since the necessary approval from the relevant regulatory authority for the proposed transaction has not been received, the company has decided not to go ahead and the proposed transaction is withdrawn,” said JSW Steel in a statement on Tuesday.
In February, the company entered into an indicative, non-binding term sheet with the arranger for the ECB which was valid for five years from the date of drawdown.
The lenders of the ECB facility had the option to convert the outstanding ECB into fully paid equity shares with full voting rights or GDRs with underlying equity shares.
FUND FOR CAPEX
The fund raised through the ECB was to be used for buying back outstanding foreign currency convertible bonds (FCCB) and for capital expenditure.
The company has to explore alternative funding source for its capital expenditure as it has already redeemed its FCCB. As of June 30, 2012, it reported a consolidated net debt of Rs 18,389 crore. In June, the company fully redeemed its FCCB by paying $392 million (about Rs 2,195 crore).
The zero coupons convertible bonds of face value $100,000 each issued in June 2007 was redeemed at 142.801 per cent of the outstanding principal amount of $274.40 million.
As a result of the redemption, there has been no dilution in the company’s equity share capital, which would have otherwise occurred through the issue of equity shares, the company had said. JSW Steel is setting up a 2.3-million-tonne a year cold rolling mill complex to manufacture high-grade automotive steel at its Vijayanagar plant in Bellary with an investment of Rs 4,500 crore.
It is also in the process of setting up a 10 mt a year integrated steel plant in West Bengal and has already invested close to Rs 500 crore.
Shares of the company were down two per cent at Rs 710 on Tuesday.