The world’s largest independent steel trader Stemcor’s trade finance business has mandated six banks for its annual revolving credit facility.

GTR has learned that ABN Amro, BNP Paribas, ING, RBS, Société Générale and Standard Chartered signed up as mandated lead arrangers for the US$650mn facility, which will be split into 1-year and 3-year tranches.

The deal should be closed in early May 2011.

“We would be optimistic at this stage that this could be the biggest deal for us so far. The take-up at this point seems to be very strong,” Colin Heritage, managing director of Stemcor Trade Finance, tells GTR.

The company is also looking to tap the Asian market once again in autumn 2011 after the steel trader tested the region with a US$75mn revolving credit facility in October 2010.

“It’s early days to say what will happen this year as far as Asia is concerned, but over time we would look to potentially increase the portion of funding we are raising in Asia. But this depends on the strengths of relative markets,” Heritage continues.

We’re looking to grow our potential sources of funding from these syndicated facilities.”

“Overall, we’re looking to grow our potential sources of funding from these syndicated facilities, and we’ve been doing that.”

The news of the revolving credit facility comes as the steel trader announced a return to pre-recession levels of turnover in its annual results.

The steel trader revealed a 45% increase in turnover to £5.1bn and pre-tax profit of £84mn, which was the highest the firm has achieved to date.

Tonnes of steel traded also increased by a quarter, with European distribution businesses returning to profit and the firm’s Indian operation AMTC managing to double its turnover on the back of increased iron ore prices.

Stemcor also maintains that Stemcor Trade Finance has and will continue to play a significant role in the firm’s operations.

“Provision of finance continues to be a key element in our service offering. Our risk controls have been substantially tightened, but this is an area where I look for continuous improvement and where there is still work to be done,” the company’s executive chairman Ralph Oppenheimer says in a statement.

However, while the news was largely positive from the company, there are a number of issues on the horizon which would hamper operations.
Stemcor has admitted that cash constraints may prevent growth, especially as the steel industry becomes increasingly consolidated.

“If we are to play a full part in that consolidation, then we may need to increase our firepower by raising some longer term capital,” Oppenheimer adds.