Indian steel giant Tata Steel is planning to restructure the continental European operations of the Anglo-Dutch steelmaker Corus, which was acquired in 2007 for $12 billion.
Accordingly, the focus of the review is Corus' plants in Spain, France and the Netherlands, and includes the possibility of selling these units if the need arises. Corus, which has an annual production capacity of 20 million mt, has plants in the UK, the Netherlands, Germany, Spain, France and Belgium.
In addition, the company recently suffered a setback due to the decision of Italian steelmaker Marcegaglia to back out from a deal to buy the company's Teesside plant in northern England on the grounds that the $480 million deal would financially put it on the spot.
Corus has already decided to divest its downstream businesses in order to limit losses. Briand Investments, an affiliate of UK-based investment group Klesch, has agreed to acquire Corus' aluminium smelters at Voerde in Germany and Delfzijl in the Netherlands. Corus has also closed its three service centres in the UK. As part of restructuring its building systems division, it has closed units in South Wales and relocated the facilities to Shotton in northeast England.
Tata Steel, which has about $9 billion of debts on its books, is also looking to roll over the $4 billion debt it incurred in the purchase of Corus. The company is said to be seeking to extend its loan repayment period for three years in order to help Corus during the downturn. Tata Steel has to repay $795 million in FY 2009-10 and $1.3 billion in FY 2010-11; however, the company is free from repayment until December 2009.