On Thursday, Tata Sponge Iron's board of directors approved the issue of 3.3 crore equity shares of the face value of Rs 10 each on a rights issue basis, with an amount not exceeding Rs 1,650 crore.

The rights entitlement ratio is 15:7, that is, 15 equity shares for every 7 equity shares held in the company by eligible equity shareholders.

The record date is fixed as 25 June, 2019 and issue price is set at Rs 500 per equity share. Issue opens on 2 July and closes on 16 July.

An Economic Times report said that the company intends to primarily retire some of its existing debts early, through the rights issue. The company had raised debt to fund its acquisition of Usha Martin's debt-ridden steel business that it acquired in April.

Shares of Tata Sponge rose by over 2 percent post the announcement to touch an intraday high of Rs 735 apiece on Thursday.

The company started its business under the name IPITATA Sponge Iron Limited in 1982, as a joint venture between Tata Steel Limited and the Industrial Promotion & Investment Corporation of Orissa Limited (IPICOL) for the production of sponge iron. It was later acquired by Tata Steel in 1991, as a subsidiary. Tata Steel holds 54.5 percent stake in Tata Sponge Iron.