UTI Mutual Fund has spun of a ₹44 crore investment in Zee Learn through two of its debt fund into a segregated portfolio. The UTI Credit Risk Fund had an exposure of ₹41 crore while the UTI Medium Term Fund had invested ₹3 crore in the debt instrument issued by the Subhash Chandra-owned company that was downgraded below investment grade of ‘B’ from ‘AA(CE)’ by Care Ratings on Tuesday.
The scheme has been suspended from the credit event day until the approval from the Board of Trustees is received for the segregation of the portfolio.
The securities are backed by an unconditional and irrevocable undertaking from Zee Entertainment Enterprises for funding of a debt service reserve account to cover any shortfall in servicing outstanding obligations of the securities seven days prior to the due date as per the repayment schedule, said UTI MF in a statement on Wednesday.
The investment in Zee Learn accounted for 9 per cent of the net AUM of the Credit Risk Fund and 3 per cent of the Medium Term Fund, it added.
Existing investors in the above mentioned schemes as of Tuesday will be allotted an equal number of units in the segregated portfolio as those held in the main portfolio. No subscription or redemption will be allowed in the segregated portfolio, it added.
Upon recovery of money from Zee Learn in the segregated portfolio, it will be distributed to investors in proportion to their holdings in the segregated portfolio.
Redemption proceeds
Investors redeeming their units will get redemption proceeds based on the net asset value of the main portfolio and will continue to hold units of the segregated portfolio, it added.
UTI Asset Management Company will list segregated portfolio units on a stock exchange within 10 working days of the creation of the portfolio and enable the transfer of such units on receipt of transfer requests besides announcing separate NAVs of the segregated and main portfolios.