MUMBAI: Tata Sons will raise about $1.8 billion in fresh loans to extinguish debt in a telecom entity as part of a broader exercise at India's largest conglomerate to be more focused on enhancing returns on invested capital.
The Tata group holding company would launch a $1.5-billion overseas borrowing programme in February and the proceeds would be used to whittle down debt at Tata Teleservices. Bombay House is in talks with leading global financiers — Citigroup, Standard Chartered, Barclays, ANZ, Bank of America, DBS and Mitsubishi — and will raise the money in a couple of weeks, multiple sources with direct knowledge of the matter told ET. Debt facility will be priced at 110-120 basis points over London Interbank Offered Rate (Libor), with 5-6 year maturities, sources said. The 12-month US dollar Libor is now at 2.26%.
Separately, the conglomerate has raised Rs 2,000 crore in four tranches from Citigroup in January with non-convertible debentures, at a coupon rate of 8.25%. "Tata Sons has already approached individual banks to raise the money as it is in advanced talks. The primary objective is to invest in Tata Teleservices," said one of the persons cited above. Proceeds could be invested in some other group companies as well.
Tata Sons needs funds to repay the remaining loans of Rs 6,000 crore at Tata Teleservices before merger with Bharti Airtel and participate in the Rs 12,800-crore rights issue of Tata Steel in February. Tata Sons needs to infuse additional equity to maintain its shareholding in Tata Steel at 31.35%. A Tata Group spokesperson declined to comment on the financing programme.