The Hindu : Business : ‘Corus buy not to impact dividend’

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Thursday, Jul 12, 2007
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‘Corus buy not to impact dividend’

Special Correspondent

Tata Steel plans preference share issue

Company proposes to raise $500 m
Steel capacity to go up to 56 m tonnes

KOLKATA: Tata Steel Chairman Ratan Tata has assured the shareholders that the acquisition of Corus will in no way jeopardise either the long-term shareholder value or Tata Steel’s dividend paying capacity.

In his first formal statement to the minority shareholders since the takeover, he said the financing of Corus acquisition had been structured in a manner that ring-fences Tata Steel’s balance-sheet and protects its shareholders’ interests.

Although the competitive bid raised the acquisition price, the chairman reiterated that “I believe that when one looks back at this acquisition, even at this price, it will be seen as a bold visionary move”.

Referring to the happenings on the domestic turf, he said with the completion of the three greenfield projects, in Orissa, Chhattisgarh and Jharkhand, hopefully by 2015, the total capacity would go up to 56 million tonnes.

Tata Steel plans to increase its present authorised capital by four-times from Rs. 2,000 crore through the issue of Rs. 6,000 crore worth of cumulative convertible preference shares of Rs. 100 each. For the issue of this type of capital, it also proposes to alter its memorandum of association, according to the notice sent to the shareholders.

This proposal would be moved as a resolution at the annual general meeting of the company next week. Tata Steel’s 100th annual report also mentioned plans to raise an amount not exceeding $500 million (Rs. 2,042 crore at the current exchange rate).

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