Tata Motors said on Friday that its UK—based subsidiary Jaguar Land Rover has completed raising of one billion Great Britain Pounds (over Rs 7,300 crore) to refinance its existing debt and other purposes.

“This is a major milestone in significantly strengthening the capital structure of Jaguar Land Rover and we are very pleased with the outcome,” Tata Motors Chief Financial Officer, Mr C Ramakrishnan, said in a filing to the Bombay Stock Exchange.

Earlier this week, the company had announced its plans to raise the amount through issue of sterling and US dollar denominated senior notes, which are debt instruments that take priority over other unsecured or otherwise more “junior” debt owed by the issuer.

“Jaguar Land Rover PLC, the parent company of Jaguar Cars Ltd and Land Rover, itself wholly owned by Tata Motors Ltd, is pleased to announce the pricing of £ 1,000 million equivalent senior notes following a significant over—subscription by investors,” the company said.

JLR has issued £ 500 million worth senior notes due 2018, at an interest of 8.125 per cent per annum. It has also issued two sets of $ 410 million senior notes each, with one set due in 2018 at 7.75 per cent per annum while the other set is due in 2021 at an interest of 8.125 per cent a year.

“The proceeds from the issuance and the sale of the notes will be used to refinance existing debt and for general corporate purposes,” the filing said.

The British firm’s total debt as on December 31, 2010, stands at £ 2.65 billion (over Rs 19,300 crore), while parent Tata Motors’ gross debt stood at about Rs 34,000 crore.

The move by JLR to raise funds comes after a month of announcing that it would invest around £ 7.5 billion (about Rs 54,000 crore) at least in the next five years, mainly on product development to catch up with global luxury car makers and position itself as a top premium brand.

Last year, JLR had raised £ 340 million loan from the European Investment Bank for research and development.

In 2009 also, JLR secured over £ 500 million of funding, including facilities from SBI, StanChart, Bank of Baroda, GE Capital and Bank of Ireland.

Tata Motors had acquired JLR from Ford for $ 2.3 billion in 2008. To fund this acquisition, the home-grown auto major had taken a bridge loan of $ 3 billion, which has been mostly re—paid or re—financed.

Related Topics