Tata Motors to replace DVRs with ordinary shares; issue 7 ordinary shares for every 10 DVRs - The Economic Times

Tata Motors board has approved the cancellation of all the Differential Voting Rights or DVRs of the company through a scheme of arrangement, and allotting ordinary shares, which would rank pari passu with the existing DVRs in the company.
The move is aimed at capital reduction, and the automaker will seek National Company Law Tribunal’s approval for the same, it said.

Holders of DVRs have different voting and dividend rights when compared to holders of ordinary shares. Tata Motors had issued DVRs back in 2008 when it did a rights issue.

Under the scheme of arrangement, the company will issue 7 fully paid-up ordinary shares of face value Rs 2 each, for every 10 DVRs.

Tata Motors will create a Trust, which will receive the new ordinary shares from the company on behalf and for the benefit of each of the relevant shareholders.
The issuance of shares instead of cash will help in preserving the liquidity for the company’s future growth. Besides, it will allow the holders of DVRs to continue to participate in the company’s performance through the ordinary shares.
The reorganization of the share capital is expected to simplify and consolidate the company’s capital structure and be value accretive for all shareholders.

The announcement of the cancellation of DVRs was taken by the board along with the quarterly earnings of the company.

Tata Motors reported a higher-than-expected consolidated net profit of Rs 3,203 crore for the quarter ended June, as against a net loss of Rs 5,007 crore a year ago. Consolidated revenue from operations increased 42% on year to Rs 1.02 lakh crore.

A sharp improvement in British arm Jaguar Land Rover Automotive’s performance, coupled with robust commercial and passenger vehicle business in India led the all-round show for the automaker.

“We remain optimistic on the demand situation despite near term uncertainties, and expect a moderate inflationary environment to continue in the near term,” the company said.

Shares of Tata Motors ended 1.6% higher on the National Stock Exchange at Rs 639.45, after scaling a lifetime high of Rs 642.50 intraday. Tata Motors DVRs ended nearly 5% higher at Rs 374.40.

PWC was the independent registered valuer for the transaction, with Citigroup and Axis Capital acting as fairness opinion providers for the shareholders of DVR and ordinary shares, respectively. Cyril Amarchand Mangaldas was the legal advisor to Tata Motors for the transaction.

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Tata Motors to replace DVRs with ordinary shares; issue 7 ordinary shares for every 10 DVRs - The Economic Times
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