Tata Motors [Get Quote], India's largest commercial vehicle maker, has postponed plans for an overseas equity issue and sale of investments to repay the $3 billion bridge loan it took in June last year to acquire the Jaguar and Land Rover brands from Ford.

The company has now asked its lenders to refinance about $2 billion of the bridge loan as a term loan. The bridge loan is due for repayment on June 1.

Confirming the development, a Tata Motors spokesperson said: "Tata Motors is in discussions with banks on re-financing the remaining $2 billion."

The spokesperson added that the company "will continue to pursue further divestment plans as outlined earlier, judiciously and in the right market conditions".

The company had repaid $1 billion of the bridge loan from the proceeds of a rights issue and stake sales in group firms Tata Steel [Get Quote] and Tata Teleservices [Get Quote] to other Tata companies.

The company could not raise the remaining amount by April, as originally planned, owing to the tightening global market following the sub-prime meltdown.

Tata Motors' last annual report shows it had investments in the group's listed entities such as Automobile Corporation of Goa [Get Quote], Tata Steel and Tata Steel CCPS. It has also not been able to raise a planned $500 million to $600 million through an equity issue in an overseas market.

Citigroup and JP Morgan were the lead managers to the $3 billion loan, which was raised with the help of other banks such as State Bank of India [Get Quote], Standard Chartered, BNP Paribas and Tokyo Mitsubishi UFH.

"It will take at least four to six weeks before the refinancing issues are finalised, since the banks are renegotiating the loan terms," said a banker familiar with the developments.

Tata Motors had taken the bridge loan last year at 100 basis points over the benchmark London Interbank Offered Rate (Libor). Owing to the global liquidity crunch, the best borrowing programmes are available for about 400 basis points over Libor.