New Delhi, Jan 11 (Agencies): Tata Steel on Tuesday said it plans to come out with a follow-on public offer for 5.7 crore shares, which might be used to retire a substantial portion of the company's USD 10.7 billion debt liability.

However, the company did not announce the dates for the proposed share sale issue.

"... The committee of directors of the company, at its meeting held on January 11, 2011, approved a further public issue of 57 million ordinary shares of Rs 10 each of the company for such price as may be determined through the book-building process," Tata Steel said in a filing to the Bombay Stock Exchange.

At the closing price of Rs 647.60 for Tata Steel shares on the BSE today, the FPO is expected to fetch Rs 3,691.32 crore. At present, the company's market capitalisation stands at Rs 58,427.39 crore.

The price band for the share sale and the minimum bid lot for the issue will be decided by the company in consultation with the book running lead managers (BRLMs), the filing  added.

It further said the issue will open after completion of all necessary regulatory requirements and 1.5 million shares will be reserved for employees.

"FPO price is the key, as the market is not performing well and Tata Steel's stock has also going down for some time now. My guess would be that the company would be offering a 5 to 10 per cent discount," Consortium Securities AVP Vishwesh Choudhary said.

He added, "Despite its high debt levels, Tata Steel is a good company to invest. So the issue should sail through institutional investors... A large chunk of money from the funds raised would be used to repay debt."

Media reports suggested that Tata Steel has roped in seven banks as the BRLMs to the issue, including Deutsche Bank AG, Royal Bank of Scotland Plc, Kotak Mahindra Capital Co  Ltd, Standard Chartered Bank Plc and Citigroup Global Markets India Pvt Ltd.