Tata Steel's Rs10,000 crore rights issue to open on November 22
21 Nov 2007
Mumbai: Tata Steel is coming out with a Rs10,000 crore rights issue to repay the ''bridge loans'' raised for funding of its British acquisition, Corus Steel.
The issue, opening on November 22, will include 12.18 crore shares of Rs300 each to be issued on rights basis in the ratio of 1:5 and cumulative compulsory preference shares (CCPS) of Rs100 to be converted into equity on 1 September 2009, a Tata Steel spokesperson said.
The record date for the issue was November 7, and the issue will close on December 21.
"The proceeds will be used to repay bridge loans taken for acquisition of Corus. Tata Steel UK has raised £3.15 million of debt for financing the acquisition," he said.
The rights issue will fetch Rs3,654 crore while CCPS will bring in Rs6,000 crore, according to Tata Steel''s draft letter of offer filed with the Securities Exchange Board of India (SEBI).
The company''s overall borrowings during 2006-07 increased by over 600 per cent from Rs3,377 crore to Rs24,926 crore, "principally in connection with its acquisition of Corus and expenditure in connection with other acquisitions and expansions," the document said
The rights issue will result in increase the company''s equity base by 20 per cent and 35 per cent after conversion of CCPS into equity.
The draft letter of offer reveals that the net profit of Corus fell to £229 million during 2006, from £451 million in the previous year.
