Tata Steel To Get Rs 3,825 Crore For Sale Of Tata Motors Stake
The shares constitute 2.85 percent of the voting rights in Tata Motors.
- Tata Steel was among the top five performers on Sensex and Nifty.
- The stock gained as much as 2.1 percent intraday.
- Stake sale to take place on or after June 23.
Tata Steel Ltd. will sell shares worth up to Rs 3,825 crore in group peer Tata Motors Ltd. to their parent company, which may help the steelmaker pare its debt.
The inter-promoter share transfer will give Tata Sons Ltd. another 2.85 percent stake in the owner of Jaguar Land Rover, according to the company's stock exchange filing. The stake sale will happen on or after June 23.
The steelmaker is expected to use the funds to pare some of its Rs 72,367 crore debt, as of March, according to the company’s results. Brokerage house CLSA had recently said it expects Tata Steel’s consolidated debt to rise to Rs 79,700 crore by the end of the current financial year, putting its debt to equity ratio at 2:1.
Tata Steel has been in talks with Germany's Thyssenkrupp AG and others for a joint venture in Europe since last year, as part of its strategy to trim losses amid a global glut of steel. It recently made a Rs 3,627-crore one-time settlement for a pension scheme to turn its U.K. operations viable.
Tata Sons will hold 31.06 percent of the voting rights in Tata Motors after the deal is completed, as per stock exchange filings.