This capital reduction translates to a 23% premium over the consideration ‘A’ ordinary share price and will result in a 4.2% reduction in the number of outstanding equity shares, making it value positive for all shareholders, the company said in a statement.
This follows the phasing out of American Depository Shares from the New York Stock Exchange in January 2023. The object of the proposed scheme of capital reduction of ‘A’ Ordinary Shares is to simplify and consolidate all traded equity securities of Tata Motors into Ordinary Shares. The scheme of arrangement consists of the cancellation of ‘A’ Ordinary Shares and the issue of 7 Ordinary Shares for every 10 ‘A’ Ordinary Shares as capital reduction consideration.
“The entire process will take 12-15 months to complete,” said PB Balaji, chief CFO, Tata Motors group. “This means around 15 crore shares will be closed, leading to a 4% increase in EPS due to reduction in capital base,” he added.
‘A’ Ordinary Shares were first issued by TML in 2008 followed by another QIP in 2010 and rights issue in 2015. The scheme also envisages creation of a trust with an independent third party acting as the trustee, to carry out various functions required to give effect to the scheme. PwC is the independent registered appraiser for the transaction, Citigroup and Axis Capital act as fairness opinion providers to ‘A’ ordinary and ordinary shareholders, respectively. Cyril Amarchand Mangaldas is the legal advisor to the company for the transaction.