The Hindu : Business : Tata Motors to invite public deposits

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Tuesday, Dec 02, 2008
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Tata Motors to invite public deposits

NEW DELHI: Struggling to finance its $2.3 billion purchase of Jaguar and Land Rover, Tata Motors is looking to borrow from the public, offering up to 11 per cent annual interest for a period of up to three years.

The company, which met with cold response from investors in its two recent separate rights issues to raise Rs. 4,147 crore for part-funding the JLR deal, said in a public announcement that it would offer 10 per cent interest on a minimum public deposit of Rs. 20,000 for a year, 10.5 per cent for two years and 11 per cent for three years.

This is the first time since 1995 that Tata Motors is borrowing from the public. When contacted a company spokesperson declined to comment how much capital the company was looking to raise through the public deposits and also the purpose for such a step. It is clear that the company needs funds to replace the $3 billion bridge loan it had taken to acquire JLR, the transaction for which was completed in June.

In July the company had got board approval to raise up to Rs. 7,200 crore separate rights issues to part-finance buyout of JLR. Its right issue, however, closed in October with a weak response, forcing the promoters to subscribe a major chunk thereby taking their holing to 42 per cent from 33 per cent. — PTI

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