The Hindu Business Line : Tata Motors plans 3 types of rights issue

Mumbai, May 28 Tata Motors said on Wednesday that it would issue shares having differential voting rights as part of its plan to raise Rs 7,200 crore for the Jaguar-Land Rover acquisition. This would likely be the first instance in recent times, of an Indian company issuing such shares.

Tata Motors said it would raise the amount through three separate rights issues. This would mean that the UK acquisition, which cost $2.3 billion, would be funded mainly through equity capital. The first issue would consist of normal shares on a right basis amounting to Rs 2,200 crore. The second would raise up to Rs 2,000 crore through issue of “A” equity shares having one vote for every 10 shares.

A further amount of Rs 3,000 crore is proposed to be raised through a third rights issue of five-year 0.5 per cent convertible preference shares (CCPs), optionally convertible into “A” equity shares after three years but before five years from the date of allotment.

Earlier, Tata Motors had announced that it would raise $500/600 million in the overseas market. Including the rights issues, the company would be raising more than Rs 9,000 crore, said Mr C. Ramakrishnan, Chief Financial Officer, Tata Motors.

The company, which acquired the iconic British auto brands earlier this year, said these equity funds would fully replace the bridge finance obtained initially from a syndicate of banks to finance the deal.

Announcing the company’s annual results here on Wednesday, Mr Ramakrishnan said the offer price, ratio and conversion prices of the rights issues will be announced later.

The shares with differential voting rights would be listed separately. A company official said he could not say whether such shares would be issued at a discount to the normal rights issue shares.