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Tata Sons to shed $1.25B stake in software services provider

India's industrial conglomerate Tata Sons Ltd. plans to sell about $1.25 billion of its stake in Tata Consultancy Services Ltd. to pay certain creditors and raise holdings in some listed units, Bloomberg News reported, citing terms of the deal and "a person with knowledge of the matter."

Tata Sons will offer 28.27 million shares of the software services provider for 2,872 Indian rupees per share to 2,925 rupees per share, according to the terms of the deal. This represents about 1.48% of the conglomerate's share in Tata Consultancy.

The proceeds will be used to pay creditors of Tata's wireless division. Tata Teleservices' mobile-phone operations were sold in 2017 to Bharti Airtel Ltd., with a pledge to pay off Tata Teleservices' debt obligations. Tata Sons is also seeking $1.5 billion in an offshore syndicated loan to repay the debt of its telecommunications unit, people familiar with the matter told Bloomberg last week.

Additionally, Tata Sons plans to use some of the funds from its stake offering to reportedly increase the parent company's holdings in some of its listed units, by potentially buying shares from other Tata group affiliates. This would help trim cross-shareholdings, the person added.

Citigroup Inc. and Morgan Stanley are arranging the offering of Tata Consultancy, Bloomberg noted.

As of March 12, US$1 was equivalent to 64.99 Indian rupees.