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Rediff.com  » Business » Tatas' JLR buy: Fundraising over

Tatas' JLR buy: Fundraising over

Last updated on: June 02, 2008 18:56 IST

A consortium of banks completed on Monday the formalities for raising the $3 billion funds for Tata Motors to acquire British auto brands Jaguar and Land Rover.

"The process (of raising the amount) is over. Tata will borrow the money from us (the banks consortium) on Monday and might come with an official announcement in the next few days," a source close to the development told PTI.

Tatas had entered into a definitive agreement with Ford to buy Jaguar and Land Rover in March for $2.3 billion. The $3 billion fund raising included Tata Motor's other committements as well.

As against the eight initial lead arrangers, the consortium has now expanded to 15 banks which include banking majors from Asia, UK and Singapore regions, the source said.

The eight mandated lead arrangers include State Bank of India, Citibank, JP Morgan, Standard Chartered, BNP Paribas, Tokyo Mitsubishi UFJ, Mizuho Financial Group and ING.

Even as the fund raising is complete,the syndication is likely to receive committments from some more banks in the coming few weeks which will expand the group of the banks who have funded the transaction, the source said.

The syndication had received commitments worth $1 billion from 6-7 banks earlier last month, comprising both domestic and foreign banks, according to sources.

Sources said a major portion of the funds would be mopped up from Asia and UK markets through bridge loans having a maturity of 12-15 months at an interest rate of about 1.10 per cent above Libor.

The banks' consortium had initiated the process of fund raising in March this year, soon after Tata Motors signed
a definitive agreement with Ford.

Tata Motors will raise upto Rs 9,770 crore (Rs 97.7 billion) through rights offers and an overseas issue of securities to repay the debt to the consortium of banks.

The syndication of banks had approached a host of global banking majors such as Chinese Construction Bank, Industrial Bank of Korea, National Bank of Dubai, HSBC and Singapore-based DBS and United Overseas Bank to participate in the process.

The domestic lenders, who have been approached include ICICI Bank, HDFC, Axis and state-run Bank of Baroda, Bank of India and Indian Bank, sources said.

Besides funding the JLR acquisition, Tata will also use the amount to partly finance their other strategic business plans including the roll out of the Rs 1-lakh Nano, sources said.

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