Business Daily from THE HINDU group of publications
Monday, Oct 23, 2006
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Business Daily from THE HINDU group of publications Monday, Oct 23, 2006 ePaper |
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Steel Corporate - Mergers & Acquisitions
Jayanta Mallick
Kolkata , Oct. 22 Tata Steel UK has given the shareholders of Corus a loan note option as an alternative to cash as consideration for tendering their holdings. The redeemable loan notes proposed bear an interest rate of 1 per cent below Libor. A shareholder, who opts for this alternative, will get lone note worth £1 for every £1 of cash consideration. The specific proposal says: "The loan notes will constitute direct, unsecured and unsubordinated obligations of Tata Steel UK and will be guaranteed as to payment of principal and interest by a reputable financial institution". The offer note further elaborates that the Libor-related interest rate would be "1 per cent below six-month sterling Libor, to be determined on the first business day of each interest period". The note terms details that "interest will be payable by two instalments in arrears (less any tax) on June 30 and December 31 in each year. On the first payment date, interest will be paid in respect of the period from (and including) the date of issue of the relevant loan notes to (but excluding) the first payment date. The loan notes will be redeemable, on not less than 14 days notice, in whole or in part for cash at par at the option of note holders on any business day between the first payment date and December 31, 2012 (both dates inclusive)". The fund for the scheme is, however, limited up to £400 million . The Tata offer note mentions that the entitlement of each Corus shareholder will be scaled down pro rata to the number of shares in respect of which he or she has opted for the loan note scheme. A rider, however, clarifies that Corus' shareholders in the US, ADS holders and "restricted overseas persons may not participate in the loan note alternative" plan. The notes will be issued by Tata Steel UK, credited as fully paid, in amounts and integral multiples of £1 and the balance of any entitlement that is not a whole multiple of £1 will be disregarded and not issued, the offer note adds. If the aggregate nominal value of exercised option is less than £20 million, then "the relevant Corus shareholders will be deemed to have elected for cash. Tata Steel UK may redeem all (but not some only) of the loan notes, in issue for at least 6 months, if the aggregate nominal value of the outstanding loan notes falls below £2 million.
Related Stories: More Stories on : Steel | Mergers & Acquisitions | Overseas Investments | Tata Steel Ltd
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