Tata Motors raises Rs 4,200 cr via NCDS

Will be used to part-finance the $3-bn loan taken to buy JLR

Tata Motors, the country’s largest truck maker, today said that it has raised Rs 4,200 crore through the issue of secured non-convertible debentures (NCDs) to financial institutions.

The money would be used for part-payment of the $3-billion (around Rs 14,313 crore, based at today’s exchange rate) bridge loan it had availed of to finance the acquisition of Jaguar and Land Rover brands from Ford Motor Company last year.

“The issue structure effectively met the company’s requirement of tenors, cost and servicing,” the company’s Chief Financial Officer C Ramakrishnan said in a statement issued this evening.

The debentures were issued at a coupon rate of 2 per cent in four tranches with the maturity period varying from 23 to 83 months. The maturity yields, which were fixed through a book-building process, were in the range of 6.75 per cent to 10 per cent. The issue opened for bids this morning and closed by the evening.

The issue was subscribed by institutional investors, comprising of mutual funds, banks, insurance companies and financial institutions. Life Insurance Corporation has subscribed to a substantial chunk of the issue.

Last June, the auto maker availed of a $3-billion bridge loan to finance its acquisition of the two marquee brands from Ford Motor Company. In January, it said it had repaid $1.11 billion from the proceeds of a rights issue and a stake sale in Tata Steel and Tata Teleservices to other group companies. The remaining $1.89 billion (about Rs 9,015 crore ) is due for repayment on June 1.

The company is in talks with bankers to raise the remaining Rs 4,700 crore in rupee- and dollar-denominated loans.

While Tata Motors had initially planned to raise the funds through an overseas equity issue and sale of additional investments, the plans did not materialise due to the adverse market conditions. This prompted Tata Motors to seek refinancing from its lenders to whom it had sent a term sheet and was negotiating the interest rate.

However, the plans were reworked, with a large portion coming by way of bonds. Citigroup and JP Morgan were the lead managers for the $3-billion loan, which was raised with the help of other banks, such as SBI, Standard Chartered, BNP Paribas and Tokyo Mitsubishi UFH.

For the Rs 4,200-crore debenture issue, Citigroup and Tata Capital were lead arrangers, while SBI Capital Markets was the joint lead arranger for the issue. State Bank of India (SBI) issued the master guarantee of Rs 4,900 crore in favour of the debenture trustee, while 10 other Indian banks participated in the facility through counter guarantees provided to SBI.