TATA Steel sells stake in TATA Motors and TATA Power
TATA Steel has raised INR 700 crore by selling its holding in TATA Motors and TATA Power to TATA Industries an entity promoted to encourage Group's investments in high tech businesses.
According to block deal data on the Bombay Stock Exchange, TATA Steel sold 4.664 million shares in TATA Motors at INR 1,038 a share and 1.7 million shares of TATA Power at INR 1,270 a share. The deal has enabled TATA Industries to increase its holding in TATA Motors by an additional 0.92 percentage point to 2.7% and in TATA Power by a further 0.71 percentage point to 2.49%.
As of June quarter, TATA Steel holds 6.76% stake in TATA Motors and 1.45% in TATA Power.
TATA Steel has been exploring various options to raise funds for its expansion projects and refinance debt at its European unit Corus. The company recently initiated talks with the banks to rise about USD 4.5 to USD 5.5 billion loan to payback debt on the Corus books. As of June quarter, TATA Steel has a net debt of USD 9.5 billion (INR 43,700 crore).
TATA Steel's European operations account for two-thirds of its global capacity of about 30 million tonnes, while the Indian operations contribute a quarter. It also has units in South East Asia and Africa.
The company recently exercised its right to acquire 80% interest in the Direct Shipping Ore project of New Millennium Capital Corp, Canada. Tata Steel will get to buy the entire iron ore produced through the DSO project for the life of the mining operation at the market prices. It is expected that the venture will produce four million dry tonnes per year of iron ore products commencing in 2012. Once the mine starts production, the deal would secure the company coal requirement to a large extend.
According to the agreement, TATA Steel will reimburse 80% of NML's cost on the DSO project and arrange funding up to USD 279 million of capital costs for the project.
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