Tata group company Tata Steel is coming out with a mega rights issue of about Rs 10,000 crore to repay the 'bridge loans' raised for funding acquisition of British steel behemoth Corus."The proceeds will be used to repay bridge loans taken for acquisition of Corus. Tata Steel UK has raised 3.15 million pounds of debt for financing the acquisition," a Tata Steel spokesperson told PTI.The issue, opening on November 22, will include 12.18 crore shares of Rs 300 each to be issued on rights basis in the ratio 1:5 and Cumulative Compulsory Preference Shares (CCPS) of Rs 100 to be converted into equity on September 1, 2009, he said.The issue will close on December 21, the spokesperson said, adding the record date for the issue was November 7, 2007.According to the Draft Letter of Offer filed with the Securities Exchange Board of India (SEBI), the rights issue will fetch Rs 3,654 crore while CCPS will bring in Rs 6,000 crore.The company's overall borrowings during 2006-07 increased by over 600 per cent from Rs 3,377 crore to Rs 24,926 crore "principally in connection with its acquisition of Corus and expenditure in connection with other acquisitions and expansions," said the document.Tata's decision to raise funds from rights issue will result in enlargement of its equity by 20 per cent after the rights issue and 35 per cent after conversion of CCPS into equity.The enlargement of equity base may impair Tata Steel's ability to maintain a high rate of dividend to its shareholders.
