Tata Steel to raise $2.5 bn to fund Corus buy

Tata Steel, which acquired Anglo-Dutch steel maker Corus in January, will raise over Rs10,000 crore ($2.5 billion) through issue of securities in domestic and overseas market to part finance the acquisition.

The company, in a notice to shareholders, said it would come out with a rights issue of ordinary shares and cumulative convertible preference (CCP) shares, besides issue of securities in the domestic or international markets.

While the company plans to raise Rs3,655 crore through the rights issue, another Rs4,350 crore would be raised through issue of CCP shares. Existing shareholders would get one share at Rs300 for every five ordinary shares held.It would also raise additional funds up to to $500 million (Rs2,042 crore) from the domestic and international markets.
Tata Steel said to facilitate issue of CCP shares, the authorised share capital would have to be raised from Rs2,000 crore to Rs8,000 crore.Tata Steel had paid $4.1 billion towards the $12.9 billion acquisition of Corus

Ruias to raise $900 m to fund Algoma buy

Essar Global, the international holding company for the Ruias, will raise $900 million through a combination of senior notes and loans to fund its acquisition of Canada’s Algoma Steel, sources said.

The non-recourse fund raising exercise by Essar Global is the second-largest such transaction by an Indian steel company, after Tata Steel’s almost $7 billion loan to finance its acquisition of Anglo-Dutch steelmaker Corus.

The Ruias’ international holding company had acquired Algoma in April for $1.58 billion in an all-cash leveraged buyout that is likely to pitchfork the Essar group with the Tatas in North America. Essar Global’s acquisition is considered the second biggest by an Indian company in North America, after Hindalco paid $6 billion to buy Atlanta-based Novelis in February. To finance its Algoma acquisition, Essar Global will sell $450 million of senior notes, recoursed to the Canadian company’s balance sheet, according to sources. The eight-year notes, denominated in dollars, may yield 9.75% to 10%. UBS is the financial advisor to the offer.

Essar Global also plans to issue $450 million in loans, based on Algoma’s earnings. The group’s own contribution will be about $500 million. It could not be ascertained how the rest of the acquisition amount — about $100 million — will be raised.

Read more in The Economic Times article.

LIC hikes Hindalco stake to 9%

Cashing in on the opportunity to consolidate its stake in Hindalco, Life Insurance Corp (LIC) has hiked its stake in the Aditya Birla flagship to over 9% through open market transactions, after its share price plunged on Novelis buyout.

Hindalco, which announced its $6 billion Novelis acquisition on February 11, saw its share price plunging 14% to Rs 149.45 a day later, and has since remained closer to this price.This lured the country's top insurer, which bought more than two crore shares in the company between March 31 and April 28 this year.

Between January 5, 2006 and April 28, 2007, LIC purchased 2.05% or 4.01 crore shares in Hindalco, the company said in a regulatory filing.

However, a closer analysis of the shareholding pattern reveals out of this 4.01 crore shares, LIC acquired 2.13 crore shares for up to Rs 324 crore in just 20 days after March 31.In comparison, it took LIC 15 months to increase its holding to 8.6 crore shares till March 31, from 6.48 crore shares, or 7.01% stake, as on January 5, 2006.

Investors may have dumped the Hindalco stock citing short-term concerns like Tata Steel after acquiring Corus, but LIC took the oppurtunity to grab a position in the company which is slated to be the world's largest aluminium rolling company after the Novelis buy-out.

TCS looks at foreign listing

Tata Sons, the holding company of the Tata group, is considering a $1 billion-plus (over Rs 4,300 crore) overseas equity sale in Tata Consultancy Services (TCS) this year to fund acquisitions of other entities.

Banking sources said the equity offer may take place in six months and include a fresh share offer as well. The group is examining the pros and cons of listing on the major exchanges, including London, Luxembourg and New York stock exchanges.

A listing on the New York Stock Exchange, where other software giants – Infosys, Wipro and Satyam — are listed, gets immediate attention from global brokerages. But the flip side is the time-consuming compliance norms under the Sarbanes-Oxley regulations.

Bankers said raising funds through an equity sale in TCS makes sense as Tata Sons holds a 78.35 per cent stake in the country’s largest software company. As a policy, Tata Sons chips in with funds whenever any group entity makes a major acquisition.

For instance, Tata Sons is expected to contribute to Tata Steel’s $12.15 billion purchase of Anglo-Dutch steel company Corus, although a major chunk of the money will be raised through debt.

Read more in The Business Standard article.

Tatas plan Rs 3500cr rights issue for Corus

Tata Steel is likely to launch a rights issue of nearly Rs 3,500 crore to part-finance its $12.15 billion acquisition of Anglo-Dutch steelmaker Corus Group, payment for which is to be made tomorrow. The issue may be priced at around Rs 400 a share, against today’s close of Rs 495.55 on the Bombay Stock Exchange.

Sources close to the situation said the Tata Steel board is slated to discuss the issue at its meeting on April 17. The proportion of the issue — how many rights shares to be given against existing shares—could not be ascertained. When contacted, a Tata Steel spokesperson declined comment.

The Tata Steel stock has risen 16.84 per cent in the past one week, anticipating such a move from the company. The BSE Sensex has risen 4.5 per cent in the period. In the past one month, the stock has gone up by 14.23 per cent, against the Sensex’s rise of 2.2 per cent.

Read more in The Business Standard article

Tata to mull financing for Corus on April 17

Tata Steel on Tuesday said its Board will meet on April 17 to discuss plans for funding the 12 billion dollar acquisition of Anglo-Dutch firm Corus Group Plc.The Board would consider proposals to finance investment in the Special Purpose Vehicle floated for acquiring Corus, the company said in a filing to the Bombay Stock Exchange.

Tata Steel had outbid Brazil's CSN to acquire Corus at a price of 608 pence a share after a nine-round auction in January, making it the world's fifth-largest steel firm. The Indian company has already spent close to 2.5 billion dollars for acquiring about 21 per cent stake in Corus through open market transactions.

Read more in The Times of India article.

Corus shareholders okay Tata Steel takeover

Shareholders of Corus Group have agreed to Tata Steel's $12 billion takeover of the Anglo-Dutch steelmaker, sealing the largest foreign acquisition by an Indian company.

Investors representing 97% of the shares backed the purchase today, Corus said following an extraordinary general meeting in London. The acquisition is scheduled to take effect April 2. Corus shares will stop trading on exchanges on March 29.