Our Bureau
Mumbai, Nov. 13 Tata Steel has approved an exchange offer of new foreign currency convertible bonds for the existing investors of $875 million convertible alternative reference securities (CARS) due for conversion in 2012.
The bonds will be converted into fully paid-up ordinary shares of the company at Rs 605.53 a share at a fixed exchange rate of Rs 46.36.
The conversion price is 15 per cent higher than the share price on Wednesday, the company had said in a statement.
In August 2007, Tata Steel had issued CARS at Rs 876.6 ($21.71) apiece with a yield-to-maturity of 5.15 per cent and due in 2012. The securities were convertible at Rs 733 and had a redemption premium of 23 per cent in case they were not converted.
The company is making the exchange offer with the objective of lengthening its debt maturity profile, bringing down cost of the issuer and reducing potential future repayment obligations.
“The move shows that the company does not expect its stock price to cross the conversion price of Rs 733. In case it is below (the conversion price), it may face huge redemption pressure,” said an analyst.
Though there are signs of global revival in steel demand, prices in India have fallen in the last two months on the back of large scale imports, he added.
http://www.thehindubusinessline.com/2009/11/14/stories/2009111450570200.htm
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