Tata Steel starts exchange for $875 million 1% convertibles due 2012; approval yet to come

By Jennifer Chiou

New York, Nov. 12 - Tata Steel Ltd. announced an invitation to holders of its $875 million of 1% Convertible Alternative Reference Securities due 2012 to exchange their CARS for new convertible bonds due 2014.

The existing CARS are convertible into qualifying securities or ordinary shares of Tata Steel.

Tata Steel said it has yet to obtain the approval of the Reserve Bank of India for the offer, meaning that it might not issue any exchange bonds.

If the approval has not been received by 10:59 a.m. ET on Nov. 19, the offer will be terminated.

Through the exchange, Tata Steel is looking to lengthen its debt maturity profile and potentially reduce future repayment obligations.

The new 4.5% convertible bonds will be due on Nov. 21, 2014 and have a conversion premium of 15% and an initial conversion price of Rs. 605.5325 per share. The company is looking to issue at least $350 million of the exchange bonds.

The early deadline was 9 p.m. ET on Nov. 11. The offer is set to end at 10:59 a.m. ET on Nov. 16.

Settlement is anticipated for Nov. 20.

Standard Chartered Bank (852 3983 8653), ABN Amro Bank NV, Hong Kong Branch (852 2700 5529),and Citigroup Global Markets Ltd. (852 2501 2551 or 852 2501 2699) are the dealer managers.

Calyon Singapore is the co-manager, and Citibank, NA, London Branch is the exchange agent.

Tata Steel is a Mumbai, India-based steel producer and part of the Tata Group of companies.

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