Hindustan Times (Jalandhar)
Tatas in talks to raise $1.5 billion via ECB
MUMBAI: Tata Sons Ltd, the holding company of the Tata Group, is looking to raise up to $1.5 billion in external commercial borrowing (ECB) in the next few weeks, two people directly aware of its fundraising plans said.
Tata Sons plans to use the funds partly to subscribe to the forthcoming rights issue of Tata Steel and also repay a part of the outstanding debt of Tata Teleservices (TTSL), which is in the process of merging with Bharti Airtel Ltd , the people cited above said on condition of anonymity.
“Tata Sons has received approval from the Reserve Bank of India for the proposed ECB and has begun discussions with foreign lenders to raise the funds,” said the first person cited above.
ECBs are loans given by nonresident lenders to Indian borrowers in foreign currency. Under the current regulatory framework, ECBs can be raised either through the automatic route, which is limited to certain sectors or under the approval route, for which the RBI’s permission is necessary.
In December, Tata Steel board approved a rights issue of ₹12,800 crore, primarily to fund the expansion of its Kalinganagar facility by 5 million tonnes per annum (MTPA) to 8 MTPA. The company has said the expansion will be completed in four years and funded through a mix of debt and equity.
“Post the rights issue, Tata Sons wants to retain its stake in Tata Steel at the current level for which it will have to infuse additional equity,” said the second person cited above.
An email sent to Tata Sons requesting comment did not elicit a response till press time on Tuesday.
“Apart from subscribing to the rights issue, the funds raised through ECB will be also used to repay a part of the ₹22,000 crore debt of Tata Teleservices,” the second person said.