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Tata Tea picks up 6.8% in Tata Coffee

January 6, 2007
Tata Tea has consolidated its position in Tata Coffee by meeting its commitment in the rights issue of Tata Coffee. It has acquired 6.8 per cent in Tata Coffee through the issue and also by subscribing to the unsubscribed portion.

Tata Tea had a stake of 50.67 per cent in Tata Coffee prior to the acquisition, which now stands at 57.48 per cent, according to an announcement made to the stock exchanges.

Tata Coffee had made its first announcement on the rights issue in March last year to raise close to Rs 130 crore.

However, the process got delayed and there were adjustments with regard to the instrument through which resources were to be mobilised. It was decided in July to raise close to Rs 250 crore through partly convertible debentures.

In June, Tata Coffee Limited acquired Eight ' Clock Coffee Company, US, from Gryphon Investors for $220 million (Rs 1,015 crore).

The increased infusion of funds was to part-fund the recent acquisition and also for other capex plans like a freeze-dried plant at Theni (Tamil Nadu) and a coffee-processing unit in Uganda.

Tata Tea had later announced its firm commitment in Tata Coffee's rights issue, where they were required to put in a minimum of Rs 125 crore. Tata Coffee had issued 62.34 lakh partly convertible debentures (PCDs) with a coupon of seven per cent in the ratio of 1 debenture for every 2 equity shares held as on a record date. Each debenture will have a face value of Rs 400 and comprises two parts.

Part A of Rs 250 will be converted into one fully-paid equity share of Rs 10 on allotment. Part B of Rs 150 will be non-convertible and will be redeemed in equal instalments of Rs 50 each at the end of fourth year, fifth year and sixth years from the date of allotment. The non-convertible portion will carry a coupon rate of 7 per cent per annum.

Tata Sons, the holding company of the Tata Group, has been recently consolidating its stake in various group companies including Tata Steel, Tata Chemicals, Titan Industries, Tata Tea and lately in Trent Limited through preferential allotment.