Jaguar Land Rover Automotive, an indirect, wholly-owned subsidiary of Tata Motors, has announced issuance of $400 million senior notes due in 2023. The notes are issued on a senior unsecured basis by Jaguar Land Rover, Land Rover, Jaguar Land Rover North America, LLC, Land Rover Exports and Jaguar Land Rover Exports.
In a statement to the BSE, Tata Motors informed that ?the net proceeds from the issuance and sale of the notes would be used by the company for general corporate purposes, including support to JLR’s ongoing growth and capital spending plans.?
This is the second time in eleven months that JLR has issued senior notes on an unsecured basis. In March 2012, the company had issued 500 million pounds senior notes due in 2020 at a coupon of 8.25% per annum. In fiscal 2013, JLR estimates the total capital spending to be in the region of 2 billion pounds, of which it expects approximately 50% for R&D and 50% for expenditure on tangible fixed assets such as facilities, tools and equipment.
The company said it expects ?capital spend to become a greater percentage of its revenue in the near to medium term in order to realise the present opportunities it sees for growth.? JLR’s capital spending target as a percentage of revenues is 10-12%.
?Given the significant growth in our sales and profitability with a strong cash and liquidity position, we plan to continue to increase and accelerate capital spending to develop new products in new and existing segments, invest in new power trains and technologies to meet customer and regulatory requirements, grow our manufacturing footprint in China and explore manufacturing opportunities in other markets,? said JLR in a trading update on its website.
JLR said it would continue to target funding most of our capital spending out of operating cash flow. However, with estimated capital spend in the region of 2.75 billion pounds in fiscal 2014, JLR expects free cash flow could be negative and hence feels that its ?strong balance sheet and liquidity (2,176.5 million pounds of total liquidity and 795 million pounds of undrawn committed credit lines with two and four years remaining as at 30 September 2012), as well as proven access to funding from capital markets and banks would also support our investment plans as required.?
For the quarter ended 31 December 2012, total retail sales of JLR were 88,658 units and total wholesale sales were 94,828 units.
