In a strategic move to alleviate its financial burden, Indian steelmaker Jayaswal Neco has secured a substantial loan of ₹3,250 crore from an array of private credit funds, including prominent names such as Bank of America and Allianz (ETR:ALVG) Global Investors. This funding initiative, announced today, is aimed at refinancing existing high-cost loans and is expected to significantly reduce the company's borrowing costs.
The capital infusion will allow Jayaswal Neco to pay off its previous obligations from ACRE, an entity backed by Ares SSG. The original loan was structured through non-convertible debentures with a steep coupon rate of 18-20% over a term of 3.5 years. By securing this new loan, the company is poised to cut its borrowing rate by a notable 500-600 basis points from the current rate of 23-24%.
This move comes as part of Jayaswal Neco's broader strategy to restructure its financial liabilities and improve its balance sheet. The company had previously entered into an agreement with ACRE in August 2021 for a borrowing of ₹3,190 crore. Today's announcement marks a pivotal step in reducing the financial strain from that high-interest agreement.
The consortium of lenders includes other significant players such as Edelweiss Alternative Fund, Cerberus, and Kotak Special Situation Fund. The collective support from these funds reflects a strong confidence in Jayaswal Neco's operational stability and future growth prospects.
Overall, this refinancing effort is anticipated to provide Jayaswal Neco with a more manageable financial structure, enabling the company to pursue its business objectives with greater fiscal efficiency.
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