A report on Friday alluded to the possibility of Tata Steel raising funds through a GDR issue or even a domestic rights issue.
MUMBAI: With Anglo-Dutch steel maker Corus Group won, it’s time for Tata Steel to foot the $12.9 billion bill.
Talk is, the country’s largest steelmaker may consider equity dilution to part finance the acquisition.
A report in the Financial Times on Friday alluded to the possibility of Tata Steel raising funds through a GDR issue or even a domestic rights issue.
“We will finalise the financing structure by this month end. We are thinking on many ways of raising money,” managing director B Muthuraman said in Jamshedpur on Friday.
Company chairman Ratan Tata had told CNBC TV18 the stockmarkets’ reaction to the Tata Steel deal “worried” him.
Muthuraman hinted sceptics will have a different take when the company reveals its fund-raising plan.
The Tata Steel share did recover a marginal 1.14% to Rs 462.95, or by Rs 5.20, after being pounded for two days in which it lost over 13%.
Investment bankers expect Tata Steel to come out with a rights issue.
This is better, they say, as the local shareholders could be given an opportunity to participate in the fund-raising plan. Last year, the company had announced a preferential offer to its promoters, which will take the promoters stake to 33% by the next fiscal.
The two-step offer with warrants attached for conversion was designed in such as way that it was in line with the Sebi rules on the limit of 5% creeping acquisition by promoters in a given year.
Tata Steel officials have in the past two days talked about “ring fencing the company” that will protect steel maker from any financial calamities accruing from the Corus deal.
That a “fund raiser” is on the cards is apparent because Tata Steel, in addition to the Corus buy is also embarking on Rs 70,000 crore domestic projects.
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