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JSW Steel enters 5-year steel trade finance deal with Duferco for $700 million

Mar 5,2019

JSW Steel has entered into a 5-year Advance Payment and Supply Agreement (APSA) with Duferco International Trading Holding (DITH) on February 27 for a consideration of 700 million dollars in a move that will help JSW steel company in funding its growth plans, the company announced. JSW Steel will be required to provide committed exports of steel products for 5years to DITH that will assure DITH of a captive supply of various steel products from JSW.

 

The deal is the largest trade finance facility to have been arranged in the Indian steel sector and is signed at a time when JSW Steel has emerged as the winning bidder for Bhushan Power and Steel (the stressed steel company) for which it has reportedly offered Rs 19,650 crore.

 

Seshagiri Rao, joint MD of JSW Steel said, “The structured long-term trade finance transaction is an important deal in diversifying the sources of financing for JSW Steel. This not only enables JSW to raise funds at competitive rates but also assures incremental volume of sales in export markets leveraging the widespread global network of the DITH Group Companies. This transaction is a win-win for both organizations.

 

The deal has been organized and financed by global banks acting as Mandated Lead Arrangers and Book Runner. Banks like Citibank, Credit Suisse, BNP Paribas, ING, Natixis, Societe Generale, Mashreqbank, Standard Chartered Bank are involved in the deal.

 

Matthew De Morgan, chief executive at DITH Group said, “The deal corroborates our faith in the sustainability of steel trading and indeed is a material statement of confidence in the reliability of our partner JSW. We look forward to facilitating JSW’s existing and future steel exports to a diverse and multinational customer base."

 

Duferco International Trading Holding Group is an independent trader and a major distributor and processor of steel products and associated raw materials. JSW Steel and Duferco had earlier had a prepayment deal in 2006 for $150 million for a period of seven years.