TPC to raise $600 m for Indonesian mines: Report

TATA Power Company (TPC), India?s largest private power utility, is planning to raise $600 million to fund its recent acquisition of coal mines in Indonesia, Indiatimes.com reported Thursday.

In March, TPC had acquired 30% stake in Indonesia-based Bumi Resources? two coal mines, for $1.3 billion.

Sources said the non-recourse debt would be raised through a special purpose vehicle (SPV) to be floated in Mauritius or Singapore.

The debt should be paid back in seven years from the profit TPC gets from Bumi?s two coal mines ? PT Kaltim Prima Coal and PT Arutmin Indonesia ? and a related trading company.

?The company has appointed US-based brokerage Calyon Financial as the lead arranger for the deal and the process will be completed in June 2007.

The SPV will raise the debt banking on Bumi?s balance sheet. The cost of debt will be pegged at 200 basis points above the Libor. It works out much cheaper compared to domestic debt,? said a source close to the development.

?The company will float a new SPV as per the earlier plan, but location has not fixed yet. We are still working on to decide the funding pattern,? TPC spokesperson said.

TPC has also signed a long-term coal purchase agreement with Bumi. The Indonesian coal will fire the proposed power projects of TPC including the 4,000 mw Mundra ultra mega power project.

Standard & Poor?s Ratings Services on Wednesday rated TPC as watch negative (BB+), raising concerns on the company?s increased debt levels. (*)