NEW DELHI: Tata Steel will subscribe to the Rs 1,800-crore rights issue floated by Tata Sponge to fund the proposed acquisition of the specialty steel business of Usha Martin, said a senior executive.

The rights issue will be part of the fundraising plan for the acquisition, which is pegged at about Rs 4,700 crore. The plan will include debt of up to Rs 2,500 crore and the issue of non-convertible debentures of up to Rs 1,000 crore.

“There will be a rights issue to support this kind of expansion and we (Tata Steel) will certainly subscribe to it,” Tata Steel’s global CEO TV Narendran told media persons at the International Steel Association Conclave in Delhi on Thursday.

The development comes at a time when the steel sector is witnessing an upcycle and prices are peaking.

On Thursday, the board of JSW Steel also approved a Rs 5,000-crore rights issue to back the company’s organic and inorganic growth.

Tata Steel is a promoter shareholder of Tata Sponge Iron and holds 54.5 per cent in the company’s share capital. Institutional shareholders hold 6.12 per cent whereas 5.19 per cent is held by foreign portfolio investors.

Tata Sponge Iron had announced on late Wednesday that it would be acquiring the steel business of Kolkata-based Usha Martin as a strategic vehicle.

The company had been evaluating options to add value to its product portfolio and was looking at entering steel manufacturing. Earlier, it had also announced a 1.5-million-tonne greenfield steel plant at Joda in the iron orerich state of Odisha.

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