Tata Motors has fixed the prices of its proposed rights issue, which, the company

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expects, will raise up to Rs 4,200 crore. The money will be used to part finance the $2.3 billion takeover of the British luxury brands, Jaguar and Land Rover (JLR).

The rights issue, which will dilute the company’s equity capital by 33 per cent, has been priced nearly 26 per cent lower than Tuesday’s closing price of Rs 429.85 on the Bombay Stock Exchange.

Tata Motors will issue one ordinary rights share of the face value of Rs 10 for every six shares held (rights ratio of 1:6). It has decided to go in for the rights issue in two unrelated parts. In the first, the company will issue ordinary shares at Rs 340 a share for a total of Rs 2,186 crore. In the other, it will allot ‘A’ ordinary shares at Rs 305 a share, amounting Rs 1,961 crore. ‘A’ ordinary shares will have differential voting and dividend rights.

While an ‘A’ ordinary shareholder will be entitled to one vote for every 10 shares held, the dividend will be five per cent more than the declared dividend on ordinary shares. The committee of directors of the company has approved the proposal. The issue is subject to regulatory approvals and is slated to open at the end of September. The company will use the money so raised to prepay a part of the short-term bridge loan taken to finance the acquisition of JLR from Ford.