India's largest private power utility company - Tata Power Company - is planning to raise $ 600 million to fund its recently acquired coal mines in Indonesia.
TPC had acquired 30 percent stake in Indonesia from Bumi Resources' two coal mines for $1.3 billion in March.
A senior Tata official said TPC is intending to repay the debt in seven years from the profit it gets from Bumi's two coal mines called PT Kaltim Prima Coal and PT Arutmin Indonesia.
The company has appointed US-based brokerage Calyon Financial as the lead manager for the deal and the process will be completed in June. It 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," the official pointed out.
He said the company will float a new special purpose vehicle as per the earlier plan, but the location has not been fixed yet. "We are still working on to decide the funding pattern," he said.
The Indonesian coal mine 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.
The credit watch with negative implication also reflects its exposure to higher project completion and counter-party risks, it said.
S&P had revised TPC's outlook to 'negative' from 'stable' in October 2006, after the company announced its $541 million investment plan and intention to set up Rs 4,000 crore (Rs 40 million) Maithon power project in Jharkhand.
