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Our Bureau

Mumbai, Oct. 20 The closing day of Tata Motors’ Rs 4,200-crore rights issue saw the company’s share price touching the 52-week low of Rs 232.65 before settling at Rs 243.9.

The rights issue is reported to have evoked poor response from the investors. The company as well as the lead managers JM Financial Consultants declined to share the details regarding the rights issue subscription. The stock price of Tata Motors, which was Rs 355.85 on September 29, when the rights issue opened, shed Rs 111.95 by the time the issue closed.

The price of ordinary rights issue was at Rs 340 and the differential voting rights component of the issue – ‘A’ ordinary shares – was priced at Rs 305. The issue was of 6.4 crore shares in the ratio of one share for every six shares held, for both the ordinary shares and those with differential voting rights.

JM Financial had agreed to underwrite the ‘A’ ordinary shares for a maximum amount up to Rs 1,327 crore. The underwriter would get 4.3 crore ordinary shares. According to the rights issue letter of offer, the promoters have undertaken that in case any part of the ‘A’ ordinary shares remain unsubscribed and the underwriters are required to underwrite in excess of 35 per cent of these shares, the entire shareholding of the promoters – Tata Steel and Tata Industries – would be subject to lock up of 90 days from the date of the devolvement. The lead managers maintained that it would take some more time to ascertain the extent to which the issue was subscribed, while a Tata Motors spokesperson said the company would go by the rules laid down by the Securities Exchange Board of India in making public the subscription details.

“There were rumours that LIC and Daimler were waiting to subscribe the right issue shares on the last day. But they might not do so since it doesn’t make any sense to purchase rights issue shares at a much higher rate than the current market price,” said an analyst.

The rights issue was to raise Rs 4,200 crore to part-finance the bridge loan to fund the $2.3-billion Jaguar Land Rover deal. Tata Sons and other group companies and related trusts together hold a little over 33 per cent of Tata Motors’ equity. The Tata group has committed to subscribe to a portion of the unsubscribed portion of the rights issue.

More Stories on : Rights Issue | HCV/LCV/Tractors | Tata Motors Ltd

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