The Telegraph
Since 1st March, 1999
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Tata Tea reaps Tetley rewards

Mumbai, March 25: Tata Tea, as a major shareholder of the Tetley group, has raked in Rs 25.35 crore as its share of interim dividend for 2002-03.

The board of Tata Tea (GB), 100 per cent owner of the Tetley group, which met yesterday approved an interim dividend of £ 4 million, about Rs 30 crore, for 2002-03.

Accordingly, Tata Tea, with an 84.5 per cent stake, will receive Rs 25.35 crore. Tata Tea Inc, USA, a wholly-owned subsidiary of the company and a shareholder of Tata Tea (GB), will receive a dividend of around Rs 4.2 crore. The dividend will be received and accounted for by both the companies within March 2003, the company added.

The dividend comes at a time when the tea industry is struggling and is in the midst of a major pressure in its business cycle. Analysts said that the announcement of a dividend could mean that the company has been successful in reviving Tetley as a brand in the global market.

TTL had earlier this month completed the refinance of the original debt raised at the time of the acquisition by Tata Tea (GB), which has now been replaced by a fresh cost effective new debt reducing Tetley’s annual interest charge by around £ 6 million per annum with effect from 2003-04.

Consequently, £ 114 million of senior debt, £ 49 million of mezzanine debt and £ 8 million of secured loan stock debt, aggregating to £ 171 million has been paid off, the weighted average interest cost of which was approximately 10.22 per cent per annum.

Tata Tea (GB) raised a fresh debt for a value of £ 174 million, all of which were senior Debt. The refinance was co-arranged by RaboBank International together with the Royal Bank of Scotland Plc.

The weighted average interest cost of the new debt raised by Tata Tea GB is 6.70 per cent.

Tata Tea Ltd posted a net profit of Rs 16.97 crore for the quarter ended December 31, 2002 as compared with Rs 20.67 crore in the quarter ended December 31, 2001. Net Sales decreased from Rs 197.5 crore in the previous year to Rs 191.41 crore in the third quarter.

Tetley, which is said to be the inventor of the teabag and maker of the traditional English cuppa, was acquired by Tata Tea in a leveraged buy-out in March 2000 with the debt-equity ratio of Tata Tea (GB) being 3:1.

The deal to buy the world's second largest producer of tea bags was worth £ 271 million and was touted to be the biggest acquisition in Indian corporate history.

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