Tata Sons set to borrow $2 billion from overseas market to repay existing debt

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After getting hit by a debt of around Rs 10,650 crores ($1.5 billion), the principal investment holding company of Tata Group, Tata Sons plans to take financial aid worth Rs 14,000 crores ($2 billion) from overseas market.

The Tata Sons owes an overall debt of around $1.5 billion from Tata Teleservices and Tata Teleservices Maharashtra.

The weighted average fixed coupon on Tata Teleservices Maharashtra debt is 11.3%, more than three percentage points higher that Tata Sons, according to data compiled by a news agency.

Interestingly, the data also revealed that the six-year long loan is the first offshore syndicated facility taken out by Tata Sons since financial year 2007. Although, it is likely that the yet-to-be borrowed funds would push the debt by 50%, the company’s debt equity ratio will remain below one. As a result, giving the company enough ambit to raise funds.

Previously, Tata Sons made an attempt to raise funds in order to repay the loan taken from its subsidiaries but was failed. In 2018, the company raised worth $750 million through a Reserve Bank of India’s special dispensation for repaying its debts.

However, the change in the RBI guidelines of 2018 regarding the NBFCs, allowing them to access loans from foreign markets, the debt ridden Tata Group, being a core investment company with the RBI, can avail the help now.

As per reports, Tata Sons will need money to repay the debt of Tata Services before the merger of Bharti Airtel with Tata Services.

Ergo, around 66% of Tata Sons’ share capital is held by public charitable trust. It also holds equity stakes in major group companies including flagship Tata Consultancy Services Ltd, Tata Steel Ltd, Tata Motors Ltd, Tata Power Company Ltd, Tata Chemicals Ltd, Tata Investment Corporation Ltd, TTSL, Tata Capital Ltd, Tata Sky Ltd, Tata Projects Ltd, among others.


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