Tata Steel Limited (the “Company”) has successfully completed India’s first ever offering of Corporate Hybrid Securities with an issuance of Rs. 1,500 Crores (US$ 332 million).
The Mandated Lead Arrangers for the issuance are J.P. Morgan Securities India Private Limited and ICICI bank Limited (the “Arrangers”).
The unique features of the securities are that they are perpetual in nature with no maturity or redemption and are callable only at the option of the Company. The Distribution rate (which may be deferred at the Company’s option) on the securities is set at 11.8% p.a., with a step up provision if the securities aren’t called after 10 years. These securities rank senior only to share capital of the Company. This provides equity characteristics to these ‘hybrid’ securities.
Koushik Chatterjee, Tata Steel Limited Group Chief Financial Officer, said: “The issuance of these perpetual hybrid securities is an important step in the overall financing strategy and capital structure management of the Tata Steel Group. As Tata Steel continues to develop and execute its significant and earnings accretive growth plans, this innovative long term funding with equity features but without the associated economic dilution helps to diversify our financing options.'
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