Tata Steel chalks out funding proposals for Corus acquisition

Mumbai, Apr 17 (UNI) Tata Steel will invest USD 4.1 billion in its wholly-owned subsidiary Tata Steel, UK, to fund the USD 12.9 billion acqusition of Anglo-Dutch steel major Corus.

The rest of the funding will be done through non-recourse debt financing from a consortium of banks (USD 6.14 billion) and in the form of bridge finance in Tata Steel Asia, Singapore (USD 2.66 billion).

The proposals to fund the acqusition were evolved during a board meeting held today.

Announcing the proposals at a press conference here, Tata Steel vice president Koushik Chatterjee said the Company will issue equity shares in the ratio 1:5 at a price of Rs 300 per share that involves equity shares of face value of Rs 122 crore.

The Company would also issue convertible preference shares in the ratio 1:7 with conversion into equity shares after two years at a price range of Rs 500 to Rs 600 per share.

Apart from these proposals, a foreign issue of an equity related instrument will also be made on an ex-right basis up to an amount of USD 500, Mr Chatterjee said.

''We had identified synergies between Corus, and as soon as the integration process is completed, we will be taking up steps to enhance the operations,'' Mr Chatterjee said.

''For the deal, Tata Steel will be utilising additional debt of USD 500 million which will be around 12 per cent of the total amount required,'' he added.

An amount of USD 4.1 billion, which is Tata Steels's exposure to the proposal, has been made through the internal generation process (USD 700 million), external commercial borrowings (ECB) worth USD 500 million, and also through funds from the preferential issues of equity shares to Tata Son's limited that would fetch an amount of USD 640 million.

''Apart from the preferential issues of equity shares to Tata Sons, Tata Steel would be raising additional equity share capital of the face value in the range of Rs 250-280 crore which would come into effect in stages during the coming three financial years,'' he added.

UNI