While the threat of Foreign Currency Convertible Bonds (FCCBs) redemption continues to stare Indian corporates in the face, some of them appear to be measuring up to the challenge well.
Close on the heels of Strides Arcolab’s announcement yesterday that it had paid off FCCBs from its own resources, two more Indian companies today announced that they had paid off their FCCBs on the due date.
This has prevented any dilution of equity at a time when share prices have come under pressure, though probably the redemption would have cost the companies a significant sum in view of the depreciation of the INR against the US dollar.
But in the case of Rolta, at least, the commitments were met from the $135 million External Commercial Borrowings (ECBs) it had tied up in March.
JSW Steel Ltd said the company redeemed its FCCBs, due today (June 28) at 142.801 per cent of the outstanding principal amount of $274.40 million. It has fully discharged its obligation towards holders of these FCCBs by making payments totalling $391,845,944 (inclusive of redemption premium).
Because of the redemption, there was no dilution in the equity share capital, which would have otherwise occurred through the issue of 1,15,93,069 equity shares of Rs 10 each arising out of the conversion of FCCBs, JSW Steel said.
Rolta India said it had redeemed FCCBs aggregating $134.7 million, including redemption premium of $38 million on the due date, and there were no FCCBs outstanding. The FCCBs’ redemption would leave the equity capital unchanged.
Rolta had said on March 26 that it had tied up funding of $135 million through ECBs for redeeming its outstanding FCCBs which had a face value of $96.69 million. From the original $150 million FCCBs, Rolta had repurchased a portion in two tranches valued at $53.31 million in 2009.
The FCCB redemption, however, did not see any significant appreciation in the stock price, though the traded volume was high. JSW Steel was trading at Rs 671.50, up by Rs 4.05 on the BSE, with a volume of 1.28 lakh shares. The 52-week-high for the stock was Rs 940 and the low was Rs 464.
Rolta, however, witnessed an unusual spike in trading volume, though the uptick in price was not significant. The stock moved up to Rs 79.10, a gain of Rs 3.30. But the volume jumped to 4.02 lakh, compared to the two-week average of 61,000 shares. The stock was still down from its 52-week high of Rs 134.75, though up from its 52-week low of Rs 50.15.