Tata Steel on Saturday fixed the price band of Rs 594-610 a share for its follow -on public offer of 5.7 crore shares, which will hit the capital markets between January 19 to 21.
At the higher end of the price band at Rs 610 per share, the company will garner Rs 3,477 crore from the FPO, while at the lower end of price band at Rs 594 a share, it will raise Rs 3,385 crore.
"Tata Steel Limited has informed the Stock Exchanges that the Committee of Directors duly authorized by the Board of Directors of the Company by a resolution dated January 14, 2011 fixed a Price Band of Rs 594 to Rs 610 per equity share for its FPO," the company said in a statement.
Its anchor investors' book, a part of qualified institutional investors, will open on January 18, one day before issue opens for public, the statement added.
Price of the FPO, in which company is off loading its 5.94 per cent stake, is offered at a discount of 5 to 8 per cent from stock price of the date of announcement, which stood at Rs 647.6 a share.
However, the company's scrips had fallen by over 4 per cent since then and was traded at Rs 621.7 apiece on the Bombay Stock Exchange on Friday, down 2.47 per cent from the previous close.
As on September 30, 2010, promoters hold 32.48 per cent stake in company, while Insurance companies and foreign institutional investors hold 22.4 per cent and 15.87 per cent stake, respectively.
The company has fixed the bid lot of a minimum of 10 equity shares and in multiples of 10 shares thereafter for the issue which comprises a net issue to the public of 5.55 crore shares and a reservation of 15 lakh shares for subscription by eligible employees.
According to an investor's presentation, the Rs 1,875 crore will be used to "part-finance the capital expenditure for expansion of its existing works at Jamshedpur from the proceeds of the FPO.
The expansion work at the Jamshedpur plant, which is scheduled for completion by March this year, will augment the steel production capacity of the plant to 10 million tonnes per annum.
In addition, Tata Steel -- which has a net debt of USD 10.7 billion -- will use another Rs 1,090 crore from the same kitty to pay the redemption amount of some of the maturing redeemable non-convertible debentures held by the Tata Group company.
As of September 30, 2010, the company had a net debt of about USD 10.7 billion (Rs 48,790.6 crore), out of which USD 5.32 billion was in lieu of loans taken by the company for expansion of its Indian operations.
The outstanding debt of the company, which has an annual steel making capacity of 27 million tonnes, also includes a part of the USD 4.58 billion loan taken by the company to acquire UK-based steel -maker Corus in 2007.
In November, the Tata Steel board had approved a proposal to raise up to Rs 7,000 crore (USD 1.5 billion) through various instruments. Subsequently, on December 24, the company secured shareholders' nod to raise a maximum of Rs 5,000 crore.
Tata Steel has appointed seven banks to manage the issue, namely Kotak Mahindra Bank , Citi Bank, Deutsche Bank AG, Royal Bank of Scotland Plc, SBI Capital Markets, Standard Chartered Bank Plc and HSBC Bank.
The seventh largest steel company in the world had posted a net profit of Rs 3,644.52 crore for the period of six months ended on September 30, 201.
Zerodha (Trading & Demat Account)
RHP
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