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Tata Tea GDR issue to get Ministry nod

Shaji Vikraman

NEW DELHI, Jan. 18

THE Finance Ministry is set to clear the proposal of Tata Tea Ltd for a Global Depository Receipts (GDRs) offering aggregating 50 million pounds ($ 80 millions), which will help the company part finance its acquisition of brands of Tetley, UK.

The proposed Leveraged Buy Out (LBO) by the Indian tea major will also feature an international loan syndication of well over $ 200 millions to close out the deal worth $ 280 million pounds, officials here said. Both the equity and debt transactions are in line to be launched over the next four to five weeks.

The debt syndication which has been planned will be one of the largest deals and will be done without the backing of any guarantee from the House of Tatas, officials said.

This will be the first attempt by an Indian company excluding the information technology sector, to take the GDR route to fund an acquisition abroad. The other Indian company which is seeking to utilise overseas equity funds to finance its buy out of sev en per cent of Tata's stake in ACC is Gujarat Ambuja Cement Ltd (GACL) which is in line to issue ADRs aggregating $ 200 millions.

Bankers said that CSFB will handle the GDR offering while Rabobank will arrange for the debt syndication.

Government officials here said that apart from these two companies, the other firms which have sought permission from the Finance Ministry and are in line for an approval shortly are Silverline Industries Ltd and Satyam Infoway Ltd for its second ADS of fering.

Silverline Industries is planning to raise $ 125 millions and has obtained approval for the issue from the Foreign Investment Promotion Board (FIPB).

With the change in guidelines governing issue of ADRs and GDRs, Indian companies are now free to utilise the entire proceeds of such overseas equity issues for acquisitions either at home or abroad. According to Finance Ministry officials, this year ther e have been a few proposals for issue of ADRs and GDRs from companies in the manufacturing sector also. Over the last few months, companies in the information technology sector have been dominant in looking westwards for raising funds through issue of eq uity.

Going by the trend now, the issuance of overseas equity this year may come close to the peak days of 1994-95, officials reckon.