JSW Steel Arm To Raise Rs 26 Bn For Thyssenkrupp Buyout

20 Jan 2025 CW Team

A JSW Steel group entity aims to raise Rs 26 billion through a three-year zero-coupon bond to fund its Rs 39 billion acquisition of Thyssenkrupp Electrical Steel India from Germany's Thyssenkrupp Group. The deal will be financed with Rs 26 billion in debt and Rs 13 billion in equity.

The bond will be raised on January 24 which has an implied yield of 9.45%. The fund raise is at Jsquare Electrical Steel Nashik (JESPL) entity, which was set up in September 2024 and is a subsidiary of JSW JFE Electrical Steel, a joint venture between JSW Steel and Japan's JFE Steel, Japan's second-largest steelmaker.

Both partners will infuse Rs 13 billion in equity into Jsquare and provide a board-backed letter of comfort, to ensure that the company can meet its financial obligations under the bond issuance, according to the terms of the bond.

Jsquare was established four months back and currently does not have its own operations. After the acquisition, the joint venture plans to rename tkES India to reflect the JSW and JFE brands.

The transaction will provide JSWSL, exclusive license from Thyssenkrup to manufacture cold rolled grain oriented (CRGO) electrical steel in India, which is restricted to only a handful of steel producers globally snf Jsquare will benefit from managerial, financial, and operational support from both JV partners, said Care Ratings which assigned AA-, Stable rating to the proposed NCDs.

JSW Steel has a production capacity of 35.7 million tonnes per annum (MTPA), including 1.5 MTPA in the US, while JFE Steel is a globally recognized steel manufacturer with a decades-long collaboration with JSW Steel.

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