(Reuters) - India's Tata Steel (TISC.BO) may further increase its stake in New Millennium Capital Corp (NML.V), a top executive at the Canadian miner said.
OnTuesday, Tata Steel, the world's eighth-largest steel producer, raisedits holding in New Millennium to 27.4 percent from 19.8 percent, afterhaving initially bought a stake in October 2008.
"Ithink Tata would like to increase its stake to at least 33 percent,which would give them a blocking position," New Millennium CapitalChief Executive Robert Martin told Reuters.
"Rightnow our company has a relatively low market capitalization. Tata hasdone a lot of work and they would want to protect themselves so thatsomebody else cannot come in and make some kind of a takeover bid,"Martin said.
When contacted, Tata Steel declined to comment.
"Iam not saying that they will (increase stake)," Martin said. "If I wasthem, I would want to increase my stake high enough so that I couldprotect myself from a hostile takeover."
Asof Tuesday, New Millennium had a market capitalization of about C$130.4million ($124.5 million), based on 133 million shares outstanding,according to Thomson Reuters data.
TataSteel bought 14.3 million shares in New Millennium for C$20 million, orC$1.40 a share, a premium of more than 40 percent to the stock's closeon Monday.
Martin said NewMillennium had enough cash, but if it needed to raise funds, it wouldmost likely do so through a private placement with Tata Steel.
"Wecould do a private placement with them at a premium, while one with anyother group would be done at a discount," Martin said, adding that hewould expect a premium of about 30 percent.
InNovember last year, Tata Steel's unit had signed a joint venture dealwith New Millennium Capital and LabMag to develop an iron ore projectin Canada.
Martin said the jointventure has not been formed yet, but once Tata Steel approves theproject, the company expects the Indian company to invest the fullC$300 million as planned.
($1=1.047 Canadian Dollar)
(Reporting by Aftab Ahmed; Editing by Gopakumar Warrier)
https://www.reuters.com/article/idUSTRE6584BX20100609