India's Tata Motors has said it is scrapping a planned nearly 700-million-dollar share issue earmarked to help pay for its purchase of British motoring icons Jaguar and Land Rover.
India's top vehicle maker, part of the steel-to-tea Tata Group, blamed the move on "the current situation in the capital market and the change in the level of prices in the stock markets" in a statement
released late Wednesday.
The company, whose earnings have been hit by a rise in steel costs, announced plans for the 30-billion-rupee (687.60 million dollar) convertible preference share issue in late May.
But since the announcement, Tata's shares have slid more than 25% and India's stock market has emerged as the worst large emerging market performer this year.
Instead, Tata Motors said it will raise funds through a "phased divestment of certain investments over the next six to eight months," preferably to companies within the sprawling group.
The money from the sales along with proceeds from investments already sold will be used for repaying a bridging loan for the Jaguar-Land Rover acquisition, it said.
Tata Motors earlier this year completed its acquisition of Jaguar and Land Rover from ailing US carmaker Ford for 2.3 billion dollars. It is set to launch the world's cheapest car, priced at 100,000 rupees
(2 500 dollars), in the October-to-December quarter.
The company said it still plans to go ahead with a 42 billion rupee share rights issue that it also announced in May.
"The process for the rights issue is making satisfactory progress... (and) is expected to be completed in the near future," Tata Motors said.