TATA Motors have raised Rs 1,250 crore by selling non-convertible debentures (NCDs) to Life Insurance Corporation of India (LIC). The NCDs bear a coupon of 10% and have a maturity of seven years. The debt is part of a larger money-raising programme to refinance the bridge loan taken for the Jaguar-Land Rover acquisition.Merchant bankers familiar with the transaction said only 2% of the total coupon payment is to be made on a quarterly basis. The remaining payment will be made upon maturity. Crisil has assigned a stable rating to the debentures based on the irrevocable and unconditional guarantee provided by SBI. Tata Motors plans to sell 2-year, 4-year and 5-year bonds in the coming weeks, said a banker, requesting anonymity. The money will be used to refinance the $3-billion loan taken last year to buy the marquee UKbased brands of Ford Motors-Jaguar and Land Rover. A substantial portion of the bridge facility has been refinanced, Standard & Poor's said in a report recently. Tata Motors used the $1 billion raised through a rights issue last year and money from the sale of stake in subsidiaries to bring down the debt to $1.88 billion. After our recent communication with Tata Motors, we expect the company to be able to successfully complete its bridge facility refinancing before the due date of June 2, 2009," said S&P credit analyst Manuel Guerena. Bankers said the company has opted for 'rear-ending' of coupons so that it has lesser outgoing of cash per quarter. For instance, under the regular mode of full coupon payment, the 5-year paper would entail an outgo of Rs 153 crore per year. But the 'rear-ending' of payments would restrict the outgo to around Rs 36 crore a year, helping the company save valuable cash in difficult times. The indicative coupon rates are 6.75-7.25% for 2-year bonds, 8-8.50% for 4-year bonds and 8.25-8.75% for 5-year bonds. Each of these papers are guaranteed by SBI, helping the automaker price its bonds competitively and resist a possible downgrade from rating agencies. This is the second time in the past seven months that Tata Motors has raised funds from LIC after the sale of Rs 1,000-crore NCDs last November. Reliance Industries, Larsen & Toubro, Mahindra & Mahindra, Aditya Birla Group and Tata group have all raised money from LIC in the past one year, taking advantage of the financial resources available at the disposal of the country's largest life insurer. In a parallel development, the fund-starved Jaguar-Land Rover continues discussions to seek the UK government's guarantee to raise Â£340-million loan for its capital expenditure and developing fuel-efficient engine and cars.
Every time an offender stealthily leaves India to take refuge in another country, the Government of India starts all over again with its strategy of bringing him back to the nation to make him stan More
Helplinelaw can set up your session with quality and experienced lawyers to discuss and resolve your legal matters. You can avail consultation in form of sending questions, phone call or webchat discussion More