Tata to Sell $1.25 Billion Stake in IT Services Arm to Pay Debt
Tata Sons Ltd., the holding company for India’s biggest business group, plans to sell about $1.25 billion of its stake in software services provider Tata Consultancy Ltd.
Tata Sons is offering 28.27 million shares of Asia’s largest software developer, or about a 1.48 percent stake, according to terms for the deal obtained by Bloomberg on Monday. The company plans to sell the shares at 2,872 rupees to 2,925 rupees a share, the terms show.
It will use the proceeds to pay creditors of its wireless division, according to a person with knowledge of the matter. Tata sold Tata Teleservices Ltd.’s mobile-phone operations to Bharti Airtel Ltd. last year and pledged to pay the unit’s obligations.
Tata Sons will also use the funds to raise its holdings in some listed units, the person said, asking not to be identified because the information is private. It may buy the stakes from other Tata Group affiliates, which would help to reduce cross-shareholdings, according to the person.
The conglomerate has been planning to raise its ownership over time in five of its largest businesses including Tata Chemicals Ltd. and Tata Steel Ltd., Bloomberg News reported last year. Tata Sons is buying an additional 6.6 percent stake in Indian Hotels Co. that was held by Tata Trusts, according to a stock exchange filing this month. Last year, it boosted its stake in Tata Motors Ltd., the owner of Jaguar Land Rover.
Citigroup Inc. and Morgan Stanley are arranging the offering of Tata Consultancy stock, according to Monday’s terms. The price range represents a 4.2 percent to 5.9 percent discount to its last close. Tata Consultancy, which is 73.5 percent owned by its parent, rose 0.6 percent to 3,052.15 rupees at the close Monday in Mumbai.
The holding company is also seeking a $1.5 billion offshore syndicated loan, as it seeks to pay down expensive debt at its telecommunications unit, people familiar with the matter said last week. Tata Sons plans to use the proceeds to repay debt of units Tata Teleservices and Tata Teleservices Maharashtra, one of the people said at the time.
Courtesy : Bloomberg , Banking Finance
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