Tata Steel has issued $547 million convertible bonds in exchange of $493 million convertible alternative reference securities (CARS) as part of the company's long-term financing strategy to reduce financing costs on a proactive basis. This not only reduces the company's overall finance charges but also extends the maturity of the bonds by two years.
The company had launched an exchange offer of new foreign currency convertible bonds for any or all of the existing $875 million CARS due 2012 on November 11.
The CARS have a yield to maturity of 5.15 per cent per annum.The bonds have a coupon (and yield to maturity) of 4.5 per cent each and will mature on November 21, 2014 (five years and one day from the date of issue).
They are convertible into fully paid-up ordinary shares of the company at Rs. 605.5325 per share at a fixed exchange rate of Rs. 46.36 a dollar, 15 per cent in excess of the closing share price of the company at the launch.
The aggregate principal amount of CARS remaining outstanding after the conversion is $382 million
