As a part of its fund raising activity to finance the Corus acquisition, Tata Steel, the country?s largest steel manufacturer, announced that it has raised a total of $875 million through the issue of foreign currency convertible alternative reference securities (CARS). This includes a green shoe option of $150 million. In a statement issued late on Monday night, the company said that the CARS issue was oversubscribed by more than two times. The $725 million of CARS was priced at Rs 876.6 ($21.71) a share. The price is at a 35% premium to the Rs 650 closing share price of the company on the National Stock Exchange of India on Monday, the company statement said.
The securities, which will be listed on an overseas stock exchange, carry a 1% coupon and the effective yield to maturity is 5.15%, the company said.
Citigroup was the sole global coordinator and book runner to the issue, while ABN AMRO Rothschild and Standard Chartered Bank are the joint book runners.
Last month, the company had announced its decision to increase the contribution of Tata Steel and Tata Steel Asia into the funding of its acquisition of Corus from $6.6 billion to $7.4 billion in order to meet with the working capital needs of Corus. This $875 million issue would part-fund the equity contribution.
The estimated acquisition cost of Corus has substantially shot up since it was acquired by the Indian steel major earlier in January this year. The net acquisition value of $12.9 billion did not take into consideration the working capital requirements of Corus. Including all additional expenses, the Corus acquisition will cost Tata Steel around $13.7 billion.
Meanwhile, global rating agency Fitch has assigned the highest rating of ?F1+(ind)? to Tata Steel?s Rs 500 crore short-term debt programme. The rating with stable outlook reflects the company?s position as an efficient value added steel producer, Fitch said.