Supply chain solutions provider Gati on Tuesday announced plans to issue a fresh foreign currency convertible bond (FCCB) to pay back its old FCCB and avoid a default on its redemption.
Simultaneously, the company has flagged off a restructuring programme that involves selling off a majority stake in its loss-making shipping division and roping in an overseas partner to take up global supply chain contracts.
“We hope to finalise the deals to sell majority stake in our shipping division and to team up with a partner for our core business by June 2012,” Mr Mahendra Agarwal, Managing Director and CEO of the company, told media persons here.
The Gati stock took a battering on the bourses for two consecutive days, triggered by concerns amongst investors on whether it would default on its existing FCCB.
The new FCCB will be for $22 million, which would be adequate to replace the old FCCB of $15 million and an interest of $7 million. “The FCCB redemption is due on December 6, 2011. We are confident that there will be no default on our FCCB commitment,” Mr Agarwal said.
The new FCCB will involve an interest of Libor plus 500 basis points, which works to about 5.5 per cent, lower than that of the old FCCB.