Tata Tea to issue preferential shares to raise funds

With reference to the earlier announcement dated September 07, 2006 and as already announced the Company together with Tata Sons Ltd will be acquiring a stake in Energy Brands Inc. of U.S.A. (Glaceau®) through the Company's U.K. subsidiary, Tata Tea(GB) Ltd(TTGB). Of the total equity contribution required for this purpose $192 million (about Rs 890 crores) will be provided by the Company and $58 million (about Rs 270 crores) by Tata Sons Ltd.

Tata Tea Ltd has announced that the Board of Directors of the Company at its meeting held on September 14, 2006 has decided that out of total amount of about Rs 890 crores required to be invested in TTGB, a sum of about Rs 420 / 460 crores be raised through a Preferential issue of equity shares with attached warrants to the main promoter Company namely Tata Sons Ltd. The market-related pricing of the shares and the warrants and other terms will be strictly in accordance with the relevant SEBI regulations and will be subject to such approvals as may be required. The approval of the shareholders will be sought for raising additional capital not exceeding 20% of the existing capital including the Preferential issue mentioned above, though for the present it is proposed to proceed only with the Preferential issue.

The balance amount required for the acquisition would be raised through sale by the Company of certain investments and from its own resources.

The above method of financing will minimise the cost of the acquisition to the Company. Pending raising of all these funds, the Company would resort to short- term bridging finance as may be required.

Source : Equity Bulls

Keywords