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    Novelis seeks bridge loan extension, refinancing


    The original bridge loan was priced after adding about 90 basis points over LIBOR.

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    MUMBAI: Novelis, the overseas unit of the Aditya Birla Group-owned Hindalco, has sought an extension of its $1.1-billion bridge loan from a group of 20 lenders as the proposed sale of two plants in Belgium and the US is stuck due to the global lockdowns. The metals company needs to sell the plants to comply with trust laws as part of its acquisition of Aleris.

    At the same time, Hindalco has arranged a $300-400 million refinancing facility, known as "backstop" in the market parlance. Axis Bank, CitiBank and Standard Chartered Bank are supporting the credit arrangement, said three people with the direct knowledge of the matter.

    “The whole financing programme was launched last Friday as the company gave time until July 31 for lenders to decide on extending the loan by another one year,” one of the persons cited above told ET.

    Banks that won’t grant extension will be repaid in full using refinancing money, where a group of three banks would charge about 35-45 basis points higher. The original bridge loan was priced after adding about 90 basis points over London Interbank Offered Rate (LIBOR).

    The Aditya Birla Group did not reply to ET’s query. Individual banks could not be contacted immediately.

    The bridge loan was for one year and would come up for repayment next April. The company is seeking an extension until April, 2022. HSBC, MUFG, and JP Morgan were among 19 lenders that lent about $51 million each. State Bank of India extended credit of $125 million.

    Hindalco Industries has completed the acquisition of Aleris for $2.8 billion through its wholly-owned US subsidiary Novelis.

    Earlier, the European Commission determined that the Aleris acquisition could proceed on the condition that Novelis divest Aleris' plant in Duffel, Belgium, to a third party approved by the Commission.

    “Novelis satisfied that condition when the European Commission determined that the proposed purchaser, Liberty House Group, is a suitable buyer of the Duffel facility,” the company said in a statement on April 8 this year.

    Liberty House Group, which is a part of the Gupta Family Group, intends to acquire the Duffel facility under its newly formed aluminum vertical called ALVANCE. The purchase price for the Duffel facility is €310 million.

    The other plant is in Lewisport, Kentucky. Its sale did not gather momentum due to the lockdown.

    Novelis reported net income attributable to its common shareholders of $63 million for the fourth quarter of fiscal year 2020, down 39 percent from the corresponding period last year and $420 million for the full year, down three percent from fiscal 2019.
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