Mumbai: Tata Motors Ltd, India’s largest vehicle maker, is offering an early conversion of notes into stock through an auction to help reduce the debt on its balance sheet.
The company, whose products range from the premium Jaguar and Land Rover to the ultra-cheap Nano car, on Tuesday invited holders of its foreign currency convertible notes to submit applications to convert them into shares.
“The invitation is aimed at further optimizing the capital structure of the company,” Tata Motors said in a statement.
“Conversion by the noteholders will strengthen the company’s capital and reserves and will help deleverage its balance sheet,” it said.
The company has 11.76 billion yen-denominated ($130.2 million) notes and $300 million dollar-denominated notes due for conversion respectively in March and April 2011.
The note holders have to submit applications selecting the price options and conversion ratios offered by the company.
At the end of the auction, which runs from 23-29 March, the managers to the invitation will decide on the conversion and determine the final price for conversion of the notes, the company said.
Tata Motors, which also makes utility vehicles and trucks, had a consolidated debt of Rs23,100 crore at the end of last December.
It has been reducing its debt, including through sale of shares in group firms. Last year, it raised $750 million through a sale of global depositary receipts and convertible bonds.
Shares in Tata Motors, which has a market value of $8.7 billion, were trading down 1.7% at Rs746.90 by 11.20 am in a firm Mumbai stockmarket.
The shares have fallen 4.1% this year, compared with 0.3% loss in the index. In 2009, the stock had quadrupled outpacing an 81% rise in the Sensex.