Tata Motors on Friday said its wholly-owned subsidiary Jaguar Land Rover (JLR) has raised ?1 billion, or about R7,290 crore, through issue of pound and US-dollar denominated senior unsecured notes. Proceeds from the issuance and sale of the notes will be used to re-finance debt and for general corporate purposes.
Debt raised through senior notes has greater seniority in the issuer’s capital structure than subordinated debt, making such notes more attractive for investors. This means that in case the issuer goes bankrupt, senior debt must be repaid first. Tata Motors, in a stock exchange filing, said that JLR is offering ?500 million (about R3,645 crore) and $410 million (about R1,837 crore) senior notes due 2018 at a coupon of 8.125% per annum and $410 million (about R1,837 crore) senior notes due 2021 at a coupon of 8.125% per annum. Shares of Tata Motors closed at R1,210.90, up 1.75% on the BSE on Friday.
Recently, Fitch Ratings had assigned JLR and its India-based parent Tata Motors (TML) long-term foreign currency issuer default ratings (IDR) of BB- and BB, respectively. The agency also assigned JLR?s proposed 1 billion pounds senior unsecured notes an expected rating of BB-(exp). Tata Motors said the notes will be guaranteed on a ?senior unsecured basis by Jaguar Cars, Land Rover, Jaguar Land Rover North America LLC, Land Rover Exports and Jaguar Cars Exports.? Kenneth Gregor, CFO, Jaguar Cars and Land Rover said, ?We are pleased to have completed this transaction successfully which we believe demonstrates the market?s confidence in our company and plans.?
C Ramakrishnan, CFO, Tata Motors added, ?This is a major milestone in significantly strengthening the capital structure of Jaguar Land Rover and we are very pleased with the outcome.?
During the quarter ended December 31, 2010, JLR posted a net profit after tax of R416.95 crore on the back of better market environment and sustained cost reduction efforts undertaken by the company.