Tata Steel completes USD 546-mn exchange offer for CARS

Last Updated: Friday, November 20, 2009 - 22:24

Mumbai: Steel major, Tata Steel, has
successfully sold USD 546.9-million of new 2014 convertible
bonds to cut its funding cost for overseas acquisition, a
company statement said.

Tata Steel had launched an exchange offer of new
foreign currency convertible bonds for the existing USD 875-
million Convertible Alternative Reference Securities ((the
CARS) due 2012 on November 11, 2009.
"The company had launched this exchange offer to
exchange part or all of the existing CARS for a fresh set of
convertible bonds. This not only reduces the overall finance
charges for the company, but also extends the maturity of the
bonds by two years. In addition, the lower conversion premium
makes the exchange bonds more equity-like which is in line
with the company’s overall de-leveraging strategy," Group
Chief Financial Officer of the Company, Koushik Chatterjee,
said in a statement.

The CARS have a yield to maturity of 5.15 per cent per
annum and are convertible into Qualifying Securities or
ordinary shares of the company. Under the Exchange offer, the
company invited holders of the CARS to offer to exchange any
or all of their CARS for new convertible bonds due 2014.

The aggregate principal amount of Convertible
Alternative Reference Securities (CARS) accepted by the
company for exchange pursuant to the exchange offer was USD
493,000,000. This comprises USD 473,500,000 and USD 19,500,000
in aggregate principal amount of CARS accepted in the early
offer and in the late offer respectively.
The aggregate principal amount of exchange bonds to be
issued by the company in exchange for the CARS pursuant to the
exchange offer was USD 546,935,000. This comprises
USD 525,585,000 and USD 21,350,000 in aggregate principal
amount of exchange bonds issued for CARS accepted in the early
offer and in the late offer respectively, the company statment
said.

About USD 382,000,000 of bonds remain outstanding, it
said.

The exchange bonds have a coupon and yield to maturity
of 4.5 per cent each and will mature on November 21, 2014.

“While Tata Steel does not have any near-term material
repayment requirements over the next 12-15 months, as part of
our long-term financing strategy, we continue to seek market
opportunities to reduce the financing costs on a pro-active
basis," Chatterjee said.

The successful execution of this issue re-affirms the
credit standing of Tata Steel in global financial markets as
the majority of the CARS which enjoyed credit protection have
been exchanged for these new convertible bonds enjoying direct
equity and credit upside on the company, he said.

PTI



First Published: Friday, November 20, 2009 - 22:24

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