Steel Exchange India , a prominent integrated steel manufacturer in South India, has announced a significant financial restructuring that promises to substantially reduce its borrowing costs and improve its financial position.

Refinancing Deal Details

The company has successfully secured a ₹350 crore refinancing facility from a consortium of leading financial institutions, including Kotak Mahindra Investments Limited, Oxyzo Financial Services Limited, and Kotak Credit Opportunities Fund. This new arrangement is set to replace existing high-cost debt, resulting in a notable reduction in the company's interest expenses.

Key Financial Benefits

• Interest Rate Reduction: The refinancing deal is expected to lower Steel Exchange India's borrowing costs by approximately 5.50% from the previous rate of 18.75% per annum.
• Extended Repayment Tenure: The new facility offers an extended repayment period of five years, up to September 2030.
• Improved Cash Flow: The company anticipates generating cumulative additional cash flow of approximately ₹130 crore until FY2028 due to the improved terms.

Implementation of the Refinancing

Steel Exchange India has already utilized ₹150 crore of the sanctioned amount for the following purposes:

• Prepayment of a ₹25 crore Term Loan
• Full pre-redemption of Secured unlisted Non-Convertible Debentures (NCDs) worth ₹84.30 crore
• Partial redemption of secured Listed NCDs amounting to ₹32.35 crore

The remaining ₹198.56 crore of outstanding Listed NCDs are scheduled to be acquired by Kotak Credit Opportunities Fund, subject to requisite approvals.

Strategic Impact

This refinancing initiative is expected to have several positive outcomes for Steel Exchange India:

1. Optimization of the capital structure
2. Enhanced liquidity position
3. Improved shareholder value through reduced finance costs

Management's Perspective

Mr. Suresh Kumar Bandi, Joint Managing Director of Steel Exchange India Limited, commented on the development: "These steps reflect our continued focus on strengthening the Company's financial foundation. The sanctioned refinance facilities at lower cost for repayment of existing high-cost debt will ease our interest burden, improve cash flows, and provide us the flexibility to support growth. This proactive financial management positions us well to pursue our long-term business objectives with greater confidence."

Company Overview

Steel Exchange India Limited, part of the Vizag Profiles Group, is known for its 'SIMHADRI TMT' brand of rebars. The company operates an Integrated Steel Plant & Power Unit near Visakhapatnam, with facilities for sponge iron, billet, rolling mill, and captive power generation.

Steel Exchange India reported the following financial metrics:

This refinancing deal marks a significant step in Steel Exchange India's journey towards improved financial health and operational efficiency, potentially setting the stage for future growth and expansion in the competitive steel manufacturing sector.

Steel Exchange India Limited (SEIL) has announced two significant financial developments that are set to impact its operations and shareholding structure.

Refinancing of Existing Loans and NCDs

SEIL has successfully secured sanctions for a Rs 350.00 crore refinancing facility on more favorable terms from Kotak Mahindra Investments Limited, Oxyzo Financial Services Limited, and Kotak Credit Opportunities Fund. This new facility will be used to prepay and take over existing Non-Convertible Debentures (NCDs) and a term loan totaling Rs 340.00 crore from various lenders including Neo Asset Management Private Limited and True North Credit Opportunities Fund.

Key highlights of the refinancing include:

• Interest Rate Reduction: The new NCDs come with an interest rate approximately 5.50% lower than the previous borrowing cost of 18.75% per annum, promising substantial savings in finance costs.
• Extended Repayment Tenure: The revised terms include a 5-year repayment period until September 2030, resulting in lower cash outflows of approximately Rs 130.00 crore until FY 2028.
• Partial Disbursement: Out of the total sanctioned amount, Rs 150.00 crore has already been disbursed, with the remaining Rs 200.00 crore expected to be disbursed shortly, subject to approvals and formalities.

Non-Disposal Undertaking on Promoter Shareholding

In a separate development, SEIL's promoters and promoter group have created a non-disposal undertaking on 63,35,95,550 equity shares, representing 50.80% of the company's total share capital. This undertaking was created in favor of VISTRA ITCL (INDIA) LIMITED as the security trustee, along with lenders Kotak Mahindra Investments Limited and Oxyzo Financial Services Limited.

Key points of the non-disposal undertaking include:

• The encumbered shares represent 99.95% of the total promoter shareholding.
• 16 individual promoters and promoter group entities are involved in this undertaking.
• The restriction prevents promoters from diluting their stake without prior written approval from lenders, except for permitted equity events and outstanding warrants.
• This undertaking is part of a facility agreement where the company will utilize Rs 150.00 crore primarily for repaying existing debt.

Financial Transactions and Compliance

SEIL has also reported the following financial transactions:

• Payment of scheduled and voluntary redemption to holders of Secured Non-Convertible Debentures.
• Payment of interest amounting to Rs 3,55,85,527 to NCD holders.
• Partial redemption of NCDs, reducing the face value from Rs 603,215 to Rs 518,700 per NCD.

Additionally, the company has announced the closure of the trading window for designated persons until 48 hours after the declaration of unaudited financial results for the quarter and half-year ended September 30.

These developments demonstrate Steel Exchange India's efforts to optimize its capital structure, reduce borrowing costs, and improve liquidity. The company remains committed to maintaining transparency with its investors and will continue to inform stakeholders of any material developments.