Tata Motors has paid about $2.3 billion in cash for JLR (comprising brands, plants, and intellectual property rights).
"To fund the initial transaction, Tata Motors raised short-term bridge facilities of $3 billion, which it plans to repay through a mix of fresh equity infusion, liquidation of investments, and long-term debt," said Standard & Poor's credit analyst Anshukant Taneja.
The company has obtained a board approval to raise up to $1.05 billion through a rights issue of equity shares, up to $750 million of optionally convertible preference shares, and $500 million-$600 million through a separate issuance of securities in overseas markets.
The creditwatch status is expected to be resolved as greater clarity and certainty is established on the long-term financing arrangements.
The likelihood of the rating being lowered further is low assuming: the overall credit metrics remain consistent with the current rating; the bridge facility is refinanced through proposed equity inflows and long-term funds, and Tata Motors' capital expenditure commitments to its domestic operations and to JLR remain broadly at the levels given by the company.
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