Briefing newspersons here, the Company’s Managing Director, Homi Khusrokhan, said it has entered into definitive agreements with for acquiring GCIP for $1.005 billion. Harbinger Capital Partners hold majority shareholding in GCIP, he pointed out. 

To a query on funding of this acquisition, Tata Chemicals’ MD was not forthcoming except stating that it will be a combination of internal accruals and debt or equity but nothing finalised as yet.

Funding buy-out

In this context, analysts here maintain that TCL should have no problem in funding the acquisition, as they have cash in hand over Rs 390 crore and investments to the tune of Rs 700 crore, besides its current debt-equity ratio at 0.6:1 of net worth should enable them to for a mix of small portion of debt with a major chunk to come from internal accruals. With this acquisition, the company will emerge as the second largest soda ash producer globally, according to some analysts here. Over 50 per cent of this capacity will be from the natural route, which is a significantly more economical route of producing Soda Ash than the synthetic route and is a natural hedge against the commodity cycle.

This acquisition, according to the MD, will provide TCL access to markets in North America, Latin America and the Far East which complement its existing markets. Currently, Tata Chem's combined capacity of Soda Ash stands at 2.9 mtpa.