Tata wraps auction to convert 0% yen notes, 1% dollar notes into stock

By Susanna Moon

Chicago, March 30 - Tata Motors Ltd. said holders converted 93% of its outstanding ¥11.76 billion zero-coupon convertible notes due March 2011 and 76% of its $300 million 1% convertible notes due April 2011.

As a result, the company was able to extinguish debt worth $345 million at current exchange rates. The company allotted 26.64 million shares to the bondholders.

The auction to convert the notes began on March 23 and ended at noon ET on March 29.

Under the offer terms, holders could convert the notes only into shares. The zero-coupon notes are normally convertible into shares or American Depositary Shares, and the 1% notes are convertible into shares or Global Depositary Shares.

As previously noted, holders were to receive shares upon conversion of the notes at enhanced conversion ratios based on the price options and volume-weighted average price upon submission during the auction period of a valid application selecting at least one price option.

The yen note options were 105.2082%, 106.2007% or 107.1932% of par, against the current redemption value of 99.253%.

The dollar note options were 130.38%, 131.61% or 132.84% of par, against the current redemption value of 121.78%.

The offer was managed by Standard Chartered Bank, Citigroup, Credit Suisse and J.P. Morgan.

"The reduced conversion price option made eminent sense from bondholders' perspective, who got additional value by opting to convert into equity. From the company's perspective, this exercise is in line with its continued efforts to deleverage its balance sheet," C. Ramakrishnan, chief financial officer of Tata Motors, said in a press release.

Tata Motors is a Mumbai, India-based car manufacturer.

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