Tata Motors will raise up to Rs9,770 crore through rights offers and an overseas issue of securities to finance the $2.3 billion acquisition of Ford Motor Co's UK luxury brands Jaguar and Land Rover.

The company plans to raise a total of about Rs7,200 crore through three simultaneous but separate rights issues, including an issue of equity shares worth up to Rs2,200 crore, Tata Motors said in filing with the Bombay Stock Exchange. (View the Jaguar | Land Rover picture gallery)

The board of Tata Motors proposed to raise about Rs 2,000 crore through a rights issue of 'A' equity shares carrying differential voting rights of one vote for every 10 'A' equity shares and another Rs3,000 crore through a rights issue of five-year 0.5 per cent convertible preference shares (CCPs).

In view of the time taken to complete the procedures and documentation involved in making rights issues, the precise terms of the above issues, ie, ratios on which these securities would be offered, the offer price and the conversion price of the CCPs, will be decided when the issues are made, the company said.

The issues are subject to such approvals and clearances as may be required and may undergo some changes during this process, it added.

On completion of the rights issues, the company plans to raise about $500/600 million (about Rs2,569 crore) through an issue of securities in the overseas markets on terms to be decided at that time.

The issue would raise the total equity capital of the company by about 30-35 per cent during the current financial year. The incremental dividend on this increased capital would represent about 10 per cent of the company's net profit for the financial year 2007-08, the company said

If the CCPs are converted between 2011 and 2013, the equity capital would then increase by only about 12 per cent, depending on the conversion price and if not converted, the CCPs would be redeemed (with the back-ended premium) in 2013.

The funds raised would be used mainly for financing the Jaguar-Land Rover acquisition. The $2.3 billion (nearly Rs 9,848 crore) acquisition, being made through the company's wholly-owned subsidiary in the UK, is expected to be completed shortly.

The initial cost of acquisition being financed through bridge loans provided by a consortium of banks, would be fully repaid through the capital raising schemes.

Tata Motors had in March entered into a definitive agreement with US car maker Ford Motor Co for acquiring its British brands Jaguar and Land Rover.