Bloomberg News - Tata Motors Ltd. (TTMT), the owner of Jaguar Land Rover, is considering raising funds overseas to reduce debt, said two bankers familiar with the matter.
The company may raise about $500 million in external commercial bonds, the bankers said, declining to be identified as the information is private. The plan is still in its early stages and the company is considering the option of a perpetual bond, one of the bankers said.
Tata, India's biggest maker of trucks and buses, paid $2.4 billion to acquire Jaguar and the Land Rover sport-utility vehicle brand from Ford Motor Co. (F) in June 2008. The company will invest 5 billion pounds ($8.2 billion) in the U.K. in the coming years, Chief Executive Officer Carl-Peter Forster said on May 6, without giving a time frame.
Chief Financial Officer Chandrasekaran Ramakrishnan said on May 26 that Tata Motors will spend 1.5 billion pounds annually on capital expenditure on Jaguar Land Rover. Tata Motors had net debt of 320 billion rupees ($7.2 billion) as of March 31, he said.
"Tata Motors raises debt capital from time to time to increase its debt maturity profile and reduce its interest cost," spokesman Debasis Ray said in an e-mailed response to questions on June 10. He declined to comment specifically on plans for an overseas bond sale.
Tata Motors shares rose 1 percent to 994.15 rupees at the 3:30 p.m. close in Mumbai. The stock has declined 24 percent this year, compared with a 12 percent decline in the benchmark Sensitive Index.
Jaguar Land Rover sold $1.63 billion of seven- and 10-year senior unsecured notes last month to refinance debt, the company said in a statement on May 13. The company sold $410 million of 7.75 percent notes and 500 million pounds ($818 million) of 8.125 percent debt due in May 2018, according to data compiled by Bloomberg. The unit of Mumbai-based Tata Motors also issued $410 million of 8.125 percent, 10-year securities, the data show.
