Mumbai: Faced with rising borrowing costs as a global credit crunch deepens, India’s Tata Motors Ltd is keen to close a deal to buy Ford Motor Co.’s Jaguar and Land Rover luxury brands by March-end.
At the same time, Tata also needs capital to help pay for the manufacture of Nano, the world’s cheapest car, due for launch in the second half of this year.
According to announcements and media reports, Tata could be raising up to $4 billion (Rs16,320 crore) on domestic and overseas debt markets. “It’s just a matter of time now...Tata will obviously want to do the (Jaguar/Land Rover) deal by March 31 so they can account for it this fiscal,” said PriceWaterhouseCoopers partner Abdul Majeed, referring to the close of the 2007-08 fiscal year.
“Clearly, because of the liquidity crunch, a deal now will be more expensive than they’d initially planned for.”
The cost of borrowing overseas has risen 200-300 basis points since July, analysts said, when the first reports of Tata’s interest in the Ford luxury brands appeared.
“It’s a staggering sum of money, which will undoubtedly put pressure on the ratings,” said Anshukant Taneja, primary credit analyst at Standard and Poor’s in Singapore.
A spokesman for Tata Motors declined comment on a timeline for the acquisition or the Financial Express report, which said Citibank NA, Standard Chartered Plc., BNP Paribas SA, JPMorgan, Bank of Tokyo-Mitsubishi UFJ Ltd and Mizuho Financial Group would “pool the resources”.