Tata sets out 3.17 bln stg loan for Corus buy

LONDON, May 3 (Reuters) Tata Steel said on Thursday it would use a 3.17 billion pound (.32 billion) non-recourse loan facility to refinance its purchase of Anglo-Dutch steelmaker Corus.

The package is split into a 1.67 billion pound five-year amortising loan and a 1.5 billon pound seven-year minimally amortising loan, the company said in a statement.

In an unusual move, Tata Steel has picked a different group of banks to arrange the refinancing to those who arranged the original bridge finance.

Citigroup, ABN AMRO and Standard Chartered Bank are arranging the refinancing, Tata Steel said. The original bridge financing for the purchase was arranged by Credit Suisse, ABN AMRO and Deutsche Bank.

Previously, it had been expected that there would be a large high-yield bond issue as part of the financing for the acquisition.

The earlier structure contained a 1.35 billion pound mezzanine bridge loan that was to have been refinanced in the high-yield bond market, as well as a 1.6 billion pound senior loan and a 350 million pound senior revolving credit facility.

Corus on Wednesday offered to buy back its existing 800 million euro bond due 2011, but said it would only pay holders 101 percent of face value, well below the market price of 106.5 percent.

The cost of insuring Corus' debt against default in the credit derivatives market fell 10 basis points to 110 basis points on Thursday, a dealer in London said.

''As always, the fear of lack of deliverables is pushing us tighter,'' the trader said, although he said he was surprised at the scale of the move given the low price on offer on the bond buyback.

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