India's Tata Steel, the world's sixth-largest steel maker, plans to sell global depositary receipts worth about $600 million, two sources with direct knowledge of the deal said on Thursday.
A company official denied the plan.
This is not true. If there is any such plan we will notify at the right moment, Chief Financial Officer Koushik Chatterjee told Reuters.
The sources, who cannot be named because they are not authorized to speak to the media, said Citigroup and JPMorgan were arrangers for the deal.
We are on the verge of launching the deal, one source said.
The company, which acquired Anglo-Dutch steel maker Corus in 2007, would most likely use the funds to meet expansion in India and also to inject cash into the UK unit, the sources said.
They declined to spell out other terms of the deal such as the price.
The offer comes after its shares surged 94 percent this year after tumbling 77 percent in 2008.
Shares in Tata Steel, which has a market value of $6 billion, climbed 6.4 percent to 420.15 rupees, their highest close in more than two weeks in a flat Mumbai market after rising as far as 428.60 on the GDR plan.
Tata Steel, which gets quarter of its revenue from India, is raising capacity to 9.8 million tonnes from 6.8 million. The company expects India demand to grow 25 percent in 2009/10.
As part of a revised debt covenants package with lenders, Tata Steel has said it would inject 425 million pounds ($695.6 million) into Tata Steel UK in a phased manner.
Tata Steel, which has $2.1 billion in cash and equivalents and $1.3 billion in undrawn bank facility, has said it has no material repayment obligations or refinancing requirements in the next 12 months.
(Additional reporting by Prashant Mehra; Editing by Ranjit Gangadharan)