Tata Power Company (TPC) on Tuesday announced refinancing of loans worth $850 million taken for funding its acquisition of 30% stake in Indonesian thermal coal producers, PT Kaltim Prima Coal and PT Arutmin Indonesia, as well as trading companies from PT Bumi Resources. It had taken $950-million one-year bridge loan to finance the $1.1-billion purchase.

The refinancing consists of a $580-million non-recourse loan and a $270-million recourse loan. The non-recourse facility has a door-to-door tenure of six years while the tenure of the recourse loan is one year more.

The financing has been provided by a group of banks led by five mandated lead arrangers including Barclays Capital, Bank of India, ICICI Bank, State Bank of India and Sumitomo Mitsui Banking Corporation. TPC will evaluate the option of refinancing the remaining $100 million of the bridge loan at an appropriate time, it said in a statement.

“We are happy to refinance the bridge loan at competitive pricing in such challenging financial markets. The rising coal prices in the international market reinforce our belief that our investment in Indonesian coal companies is timely and pragmatic,” managing director Prasad R Menon said in the statement, without divulging the pricing.

The Indonesian coal companies are among the top three largest exporting thermal coal mines in the world. They have good coal export infrastructure and are strategically well placed to act as a source of supply for increasing regional demand. Together, KPC and Arutmin produced around 54.2 mt of coal in 2007.

Fast-growing regional demand for thermal coal coupled with supply constraints in certain exporting countries has led to higher coal prices. Share prices of TPC rose 3.07% to close at Rs 1,391.75 on BSE.

The companies are “world class assets” and have enjoyed robust financial performance recently given rising production volumes and the increases in coal prices, TPC said.