Tata Steel has unveiled a $2.1 billion (Rs 17,408 crore) investment plan for its Singapore arm, aiming to achieve two main objectives. The investment will be used to repay the debt of its offshore entities and to fund the restructuring of its loss-making UK business, the company announced on May 29.
In addition to the capital infusion, Tata Steel plans to convert debt instruments worth $565 million (Rs 4,661 crore) held by its Singapore subsidiary into equity shares. Both the investment and the debt-to-equity conversion are scheduled to be completed within the current fiscal year.
Tata Steel's Singapore subsidiary, T Steel Holdings, which manages its international steel assets including the UK plant, reported a loss of Rs 4,367 crore in FY23. To raise additional funds, Tata Steel intends to raise Rs 3,000 crore through non-convertible debentures (NCDs), a method it frequently uses for fundraising.
Part of the investment includes a £1.25 billion ($1.6 billion) project to build a new electric arc furnace (EAF) at its Port Talbot plant in the UK. As part of this initiative, Tata Steel plans to shut down two blast furnaces at the facility by September, resulting in the loss of 2,800 jobs.
According to a statement by Tata Steel management, "We will proceed with the proposal to shut down heavy end assets this year and set up EAF by 2027. This is a difficult period of change for our people. Regarding the EAF, we will place equipment orders by September 2024 and have signed an agreement with UK National Grid securing a high-voltage connection, which will be available on schedule. As part of discussions with the unions, we have offered the best-ever package of support for affected employees at Tata Steel UK. We have agreed on the final terms of the proposed grant package with the UK government to support the £1.25 billion investment."
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