Tata Motors raises Rs4200 crore via debenture issue

21 May 2009

Tata Motors Ltd, India's biggest truck maker, has raised Rs4,200 crore through an issue of non-convertible debentures to financial institutions, which is among the largest by an Indian corporate and the first of its kind for the Indian capital markets.

The funds will be used to partly repay a $3 billion (Rs14,313 crore) bridge loan Tata Motors had raised last year to acquire marquee brands Jaguar and Land Rover. (See: Tata Motors confirms Jaguar, Land Rover deal with Ford for $2.3 billion)

The company has already repaid $1.11 billion of the loan it obtained for the acquisition from Ford Motor Co last year, after selling over 10 million shares or 1.3 per cent equity of Tata Steel Ltd to group holding company Tata Sons Ltd for a total of Rs485 crore in September 2008. (See: Tata Motors partially divests Tata Steel stake to raise Rs485 crore for JLR)

The remainder is due for repayment on 2 June.

Tata Motors said late on Wednesday that the debentures, issued in four tranches with maturities ranging from 23 to 83 months, carry a coupon rate of 2 per cent and have been guaranteed by the State Bank of India.

The issue was book-built and the maturity yield for the 23-month tranche was fixed at 6.75 per cent, for the 47-month tranche at 8.4 per cent, for the 59-month tranche at 8.45 per cent and 10 per cent for the 83-month tranche. The State Bank has issued a master guarantee for 49 billion rupees.