The country’s largest auto maker, Tata Motors, may buy the entire stake of its partner Thonburi Automotive in the Thailand venture in case the overseas entity is unable to raise fresh equity.
In its annual report for 2008-09, the Indian car major has said it may have to purchase Thonburi’s 20 per cent stake in Tata Motors (Thailand) Ltd (TMTL), in case the JV is not able to raise fresh equity for its operations.
"As per the proposed arrangement to be entered between the company (Tata Motors), Thonburi and Citibank NA, on occurrence of certain event, the company (Tata Motors) may have to purchase Thonburi’s stake of 20 per cent in TMTL," the home-grown major said in the report.
The JV company is seeking loans of Rs 121.71 crore from Citibank NA, for which Tata Motors has to give guarantee worth Rs 85.20 crore. Tata Motors has given a letter of comfort to the lender against the short-term and long-term loans in accordance to Rupee-Bhat exchange rate as on March 31, 2009.
"The company (Tata Motors) has given a letter of comfort to Citibank NA against the short-term and long-term loans aggregating THB 850 million (Rs 121.71 crore as on March 31, 2009) given by Citibank NA to TMTL," the report said.
The letter of comfort is restricted to 70 per cent of the total equity, amounting to THB 595 million (Rs 85.20 crore as on March 31, 2009), it added.
Source: Business-Standard