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Friday, 13 January 2012

Follow UP~~FCCB REDEMPTION PRESSURE!!!

Ø In the month of Dec i had mentioned companies will face redemption pressure in early 2012.With India's economic growth buckling and the rupee sliding, many companies, are expected to struggle to meet debt obligations in the coming months

Ø Investors will try their best to recover their money. So can the companies refinance? or will they extend the repayment date? Or lastly take a shave or haircut and reach a settlement, Holders will always want to take whatever money is possible and get out. If the companies chose to refinance redemption, then profits would take a hit

Ø "FCCB" a type of convertible bond issued in a currency different than the issuer's domestic currency. In other words, the money being raised by the issuing company is in the form of a foreign currency. A convertible bond is a mix between a debt and equity instrument. It acts like a bond by making regular coupon and principal payments, but these bonds also give the bondholder the option to convert the bond into stock.

Ø With India's economic growth buckling and the rupee at an all-time low, many companies are expected to struggle to meet debt obligations in the coming months. Seeking to finance acquisitions and their aggressive expansion, Indian companies raised funds through foreign currency convertible bonds (FCCBs) and bank loans before the financial crisis struck in 2008.

Ø Many of those debts need to be repaid next year, and the timing could hardly look any worse. The rupee has nosedived and is Asia's worst performing currency this year. It's a very tricky situation for Indian companies. More than two dozen companies on the Indian benchmarks face FCCB redemption worth 330 billion rupees by the end of the next fiscal year in March 2013.

Ø The convertible bonds are too expensive at current levels to be converted into stocks, and the weaker rupee, which slumped to an all-time low of 54.30 to the U.S. dollar ,will leave issuers with a heavy redemption burden.

Ø The rupee has lost close to a fifth of its value since July, and is adding to a growing sense of economic crisis in India. Given the current state of markets, FCCB conversion into equity shares won't happen, and even refinancing would be difficult. And If any default it will have an horrendous domino effect in the country.

Ø Companies who issued FCCB and Maturing Next Year Are As follows:-



FCCBs
Issuer Redemption Month Year of issue Conversion price (Rs/share) Current stock price Rs/share FCCB size (US$mn)
Ruchi Infrastructure Ltd Feb-12 2007 39.2 18.0 40.0
Murli Industries Ltd Feb-12 2007 379.0 17.1 23.0
Rajesh Exports Ltd Feb-12 2007 67.1 139.0 150.0
Orchid Chemicals & Pharma ltd Feb-12 2007 348.3 149.9 175.0






Reliance Communication LTd Mar-12 2007 661.2 82.8 1,000.0
Subex Ltd Mar-12 2007 656.2 33.0 180.0
Subex Ltd Mar-12 2009 80.3 33.0 98.7
Uflex Ltd Mar-12 2007 144.7 135.4 85.0
Icsa India Ltd Mar-12 2007 189.7 31.3 22.0
Kamat Hotels India Mar-12 2007 225.0 126.4 18.0
Klg Systel Limited Mar-12 2007 350.0 27.1 22.0






3I Infotech Ltd Apr-12 2007 154.3 16.0 39.8
Grabal Alok Impex Ltd Apr-12 2007 51.0 18.0 20.0
Hotel Leela Venture Ltd Apr-12 2007 72.0 33.3 100.0
Bharat Forge Limited Apr-12 2006 604.0 277.6 40.0
Icsa India Ltd Apr-12 2007 226.8 31.3 24.0






Sterling Biotech Ltd May-12 2007 163.1 13.0 250.0
Man Industries India Ltd May-12 2007 115.0 106.5 50.0






Suzlon Energy Ltd Jun-12 2007 97.3 20.7 300.0
Suzlon Energy Ltd Jun-12 2009 76.7 20.7 35.6
Moser Baer India Ltd Jun-12 2007 364.0 17.8 75.0
Strides Arcolab Ltd Jun-12 2007 461.6 378.3 100.0
Jsw Steel Ltd Jun-12 2007 953.4 631.6 325.0
Rolta India Ltd Jun-12 2007 368.7 68.7 150.0






Tata Motors Ltd Jul-12 2007 181.4 206.2 490.0
Gemini Communications Lt Jul-12 2007 41.7 20.0 20.7
Micro Technologies India Jul-12 2007 250.4 172.4 20.0
Educomp Solutions Ltd Jul-12 2007 590.0 211.6 80.0
3I Infotech Ltd Jul-12 2007 165.9 16.0 100.0






Gayatri Projects Ltd Aug-12 2007 288.0 117.8 25.0
Zenith Infotech Ltd Aug-12 2007 521.6 43.9 45.0
Tulip Telecom Ltd Aug-12 2007 227.4 116.8 150.0






Tata Steel Ltd Sep-12 2007 730.5 388.9 875.0
Jaiprakash Associates Sep-12 2007 165.2 58.8 400.0






Everest Kanto Cylinder L Oct-12 2007 271.3 31.7 35.0
Suzlon Energy Ltd Oct-12 2007 97.3 20.7 200.0
Suzlon Energy Ltd Oct-12 2009 76.7 20.7 20.8
Great Offshore Limited Oct-12 2007 565.0 87.3 42.0
Karuturi Global Ltd Oct-12 2007 19.0 4.9 50.0
Plethico Pharmaceuticals Oct-12 2007 483.8 365.4 75.0






Gtl Infrastructure Ltd Nov-12 2007 53.0 10.4 300.0






Firstsource Solutions Ltd Dec-12 2007 92.3 8.1 275.0
Easun Reyrolle Ltd Dec-12 2007 315.0 57.0 35.0
Pidilite Industries Dec-12 2007 102.4 145.8 40.0
Prime Focus Ltd Dec-12 2007 110.9 54.4 55.0
Shree Asht Cine Vision Dec-12 2007 44.0 4.2 33.0
Indowind Energy Ltd Dec-12 2007 167.1 6.3 30.0






Aksh Optifibre Ltd Jan-13 2008 59.8 7.1 20.0
Geodesic Ltd Jan-13 2008 302.3 45.1 125.0






Bartronics India Ltd Feb-13 2007 191.3 32.1 50.0






Jaiprakash Associates Mar-13 2006 74.5 58.8 199.1
Sintex Industries Ltd Mar-13 2008 246.5 72.2 225.0
Bharat Forge Limited Apr-13 2006 690.3 277.6 40.0

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