Bonds issue to raise funds for JLR |
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| Date Added: May 08, 2009 07:35:10 AM | |
| Author: Carazoo | |
| Category: News & Media: Automotive | |
Tata Motors is struggling to make ends meet to repay loans to borrowed for acquisition of Jaguar and Land Rover. The company is in the midst of seeking loan guarantee from the British Government. In the meanwhile the company plans to raise Rs 5,000 Crore though a bond issue. The money thus raised will help re-finance the RS 10,000 Crore ($ 2 billion) bridge loan that Tata had acquired to take over Jaguar and Land Rover. Sources in Tata Motors said that State Bank of India and other banks were providing a guarantee for the fund raising exercise. Tata Motors had raised Rs 2,500 Crore from bookings for Tata Nano cars due to hit the roads in July, this year. This was almost half of 5 Lakh bookings, predicted by the market analysts. The bonds are expected to be issued this year. The bonds will have a maturity ranging from 2–7 years. Tata Motors, India’s largest auto manufacturer, is in the process of raising Rs 5,000 crore through a bond issue to refinance the remaining $2 billion (Rs 10,000 Crore) bridge loan it took to acquire Jaguar and Land Rover. It is expected that half of the repayment will be made through the issue of bonds, and the remaining is expected to come by way of term loans. Tata Motors had borrowed a $ 3 billion (Rs 15,000 Crore) bridge loan to finance its acquisition of the car brands from Ford Motors. It had already repaid around Rs 5,000 Crore ($ 1 billion) from the funds gained by rights issue and stake sale in Tata Steel and Tata Teleservices to other group companies. The remaining amount of Rs 10,000 Crore ($2 billion) is due for payment in June. The bonds issue is expected to raise only Rs 5,000 Crore The change in the world economic scenario since October 2008, altered their earlier plans to raise funds through an overseas equity issue and sale of few more company’s investments. That plan was dropped and Tata Motors had to think of a new plan. The company also sought refinancing from its lenders and was negotiating the interest rates. The plans were re-chalked and it has been decided that a large portion of funds would be raised through bonds. However the credit restrictions continue to make overseas funding a difficult task for the Indian company. The $ 3 billion loan was raised by a consortium of banks including domestic and overseas. On the use of loan guarantees, the UK government is putting tremendous strain on Tata Motors . While UK government promises to support only half of the total $ 340 million (Rs 2521 Crore) the British government has agreed for only Rs 1297 Crore. A total of 1,000 people from the Jaguar plants have taken voluntary retirement form the total 16,000 strength of workforce at the Jaguar’s three facilities. Creating an efficient workforce and restructuring these plants is the only way out for Tata Nano after it finishes re-paying the loans. It all goes to show that Tata Motors made an audacious acquisition of the British car brands, without having much backing. Tata is looking at all avenues for rising funds and repayment of loan. In the meantime British government refuses to concede to Tata demands. It proves that the Tata Motors had gained little by acquiring these companies. |
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Bonds issue to raise funds for JLR
Tata Motors is struggling to make ends meet to repay loans to borrowed for acquisition of Jaguar and Land Rover.
Tata Motors is struggling to make ends meet to repay loans to borrowed for acquisition of Jaguar and Land Rover.
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