In what’s been dubbed as a rather unique agreement for an Indian steel company, JSW Steel this week signed a payment and supply deal with Duferco International Trading Holding (DITH) for U.S. $700 million.
According to reports, the five-year agreement provides DITH with supplies of various steel products over the agreement term. For JSW, on the other hand, it confirms a steady flow of funds for its growth plans.
JSW Steel, one of India’s largest steelmakers, recently received a letter of intent in the auction of the insolvent Bhushan Power & Steel Ltd., taking it one step closer to acquisition of Bhushan. Also, late last year JSW Steel announced a multimillion-dollar plan to strengthen its downstream manufacturing capacity.
The new arrangement with DITH entails a financing structure that will provide JSW long-term funding to complement its plans for future growth, secured by committed exports of steel products to DITH, the company said in a statement.
This is not the first time that JSW and DITH have entered into a deal; there have been smaller agreements in the past 15 years. The deal, according to reports, was “the largest trade finance facility” to have been arranged in the Indian steel sector.
According to the company, the deal has been arranged and financed by a number of global banks: BNP Paribas, Citibank, Credit Suisse, ING, Mashreqbank, Natixis, Societe Generale, with Standard Chartered Bank acting as mandated lead arrangers and bookrunners.
JSW Steel is the flagship company of the U.S. $13 billion JSW Group. The company has about 50,000 customers in 108 countries, and a recorded turnover of U.S. $7 billion, with sales of 12 million tons per annum.
Going by JSW’s plans, Moody’s Investors Service recently revised the outlook on JSW Steel to positive from stable, citing an improved credit situation.
Moody’s also affirmed JSW Steel’s Ba2 corporate family rating (CFR) and the Ba2 rating on the company’s senior unsecured notes.