Tata Steel will redeem all its convertible alternative reference securities (CARS) at a premium of 123 per cent by September 5. This will result in an outgo of Rs 2,602 crore.
Tata Steel is paying off its liability due under CARS to the extent of $471 million for the principal amount, along with accrued interest of $1.9 million for the last six months on the maturity date (September 5), the company said in a statement.
In 2007, Tata Steel, in a bid to part-finance the Corus acquisition, raised $875 million through issue of CARS which matured in 2009. The company came up with an exchange offer for CARS holders in 2009.
According to the offer, the investors had the option of switching over new foreign currency convertible bonds (FCCBs) maturing in November 2014 or stick with the CARS that was slated for repayment on September 5. This arrangement was made to lengthen the debt maturity profile, reduce the cost of issuer and potentially trim future repayment obligations, Tata Steel had said.
Shares of the company on the BSE were down one per cent at Rs 392 on Tuesday.