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Tata Steel authorised capital to bloat four-fold to Rs 8k cr

Tata Steel is hiking its authorised capital four-fold, from Rs 2,000 cr to Rs 8,000 cr, by creating a new class of capital, CCP shares worth Rs 6,000 crore.

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MUMBAI: Tata Steel is hiking its authorised capital four-fold, from Rs 2,000 crore to Rs 8,000 crore, by creating a new class of capital — cumulative convertible preference (CCP) shares worth Rs 6,000 crore.

The sixth-largest global steel producer said that the money is being raised to fund the acquisition of Corus Group and part-finance other expansion plans. This should provide big relief, too. 

As per its 2006-07 annual report, Tata Steel’s consolidated debt-equity ratio stood at 1.7:1, which is considered high. Hence, the share issue. This, along with current year profits, will the company help halve the debt-equity by March 2008.  “This strengthening of the balance-sheet will also provide some leeway to Tata Steel to raise further debt to finance its domestic expansion plans, whenever required,” experts say.

The rise in  authorised capital will more than accommodate the slew of fund- raising that will kick-start soon, with a generous rights issue to Tata Steel shareholders at a price of Rs 300 per share, which will help raise Rs 3,655 crore.

Later, a 2% CCP shares of Rs 100 each, to be convertible between 18-30 months with a conversion price of Rs 500-Rs 600 per share (or higher) will enable the company raise another Rs 4,350 crore or more.

The company also proposes to get shareholder approval to issue foreign currency convertible bonds through the depository receipt mechanism to raise $500 million (about Rs 2,000 crore) in one or more currencies.  Turn to Page 22

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