Tata Motors raises $750 million within an hour to clear JLR debt

Tata Motors today raised $750 million by selling global depositary shares and coupon convertible notes to pay off the remaining $700-million debt raised for the acquisition of Jaguar and Land Rover (JLR).

Tata Motors said that it has issued 29,904,306 new equity shares in the form of global depositary recipts (GDRs) at a price of $12.54 per GDR, aggregating $375 million and 3,750, 4 per cent Coupon Convertible Notes  due 2014 at a price of $100,000 per Note, aggregating $375 million.

These GDRs and Notes, together aggregating $750 million, will be listed on the Luxembourg Stock Exchange.

The offering was successfully executed against the backdrop of volatile equity market conditions with strong investor interest resulting in the book being closed in less than an hour from launch generating a demand of $1.25 billion from 40 investors.

The deal size was raised from a base $600 million to $750 million. The GDR pricing represents a tight 1.5 per cent discount to the closing price on 8 October 2009 of Rs589.25, while the Notes were issued at a 7.5 per cent conversion premium over the GDR price with a yield to maturity of 5.5 per cent.

Tata Motors said that it intends to use the net proceeds from this offering for repayment of debt incurred in connection with the acquisition of Jaguar Land Rover, the outstanding of which stands at $ 700 million and for other purposes such as capital expenditure, working capital and other general corporate purposes.