CASE PROPOSAL

Case assigned: Continental carrier Inc.

Company selection: Tata Corus
Why TATA-CORUS:
Tata steel purchased 100% stakes in Anglo-Dutch steel maker Corus in all cash deal. The deal is the
largest takeover by Indian firm which made Tata steel the worlds fifth largest steel group. Tata steel
was also facing the same issue of using best option of financing this deal. We believe this is a content
rich case which can provide better idea about industry acquisitions and their financing.
Tata surprised the credit default swap segment of the derivative markets by deciding to raise $6.17bn
of debt for the deal through a new subsidiary of Corus called 'Tata Steel UK', rather than by raising the
debt itself. Tata's security credit rating is investment grade, whereas the new subsidiary may not be.
The higher risk associated with raising debt through a subsidiary with a lower credit rating
prompted Fitch Ratings to downgrade its rating of the credit swap risks in the takeover to 'negative'.
Fitch also stated that Corus' responsibility for the debt may lead to Corus' own unsecured debt rating
being downgraded. This does not affect the rating of bonds issued by Corus which are secured debt.
Approach

There will be three stages of project as shown in the above table and each stage will be followed by a
review with the professor. After successfully completion of stage 2 and review a report in form of case
formation and solution. This is the proposed methodology of project and can be changed in any stage
as per guidance of professor.

Group 12: Arun ABM11030 | Nidhi ABM11032 |Fuad FPM15009 | Rahul PGP29369 | Preet PGP30332