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  1. 1. FCCB Foreign Currency convertible bond issued by a country in a currency different than the its own currency Powerful instrument by which the country raises the money in the form of a foreign currency Bond acts like both a debt and equity instrument Bondholder the option to convert the bond into a company’s equity share Retain all features of a convertible bond
  2. 2. Current Crisis FCCBs became the favored instrument to raise capital for Indian companies during the bull run from 2004 to 2007 A large number of FCCB issued by Indian companies, due to mature in next future Equity market not trading at the levels assumed when the bonds were issued Majority of the bonds have not been converted to equity Companies struggling to meet their obligations on the debt
  3. 3. Emerge from the crisis Need to repay an estimated Rs. 33,000 crore (over $7 billion) The Chinese banks may emerge as the big winners Reset the conversion price Approaching Investment Banks to be mediator Utilising the unused portion
  4. 4. Restructuring of FCCBs Restructuring is the reorganization of a companys outstanding obligations Mostly done by reducing the burden of the debts on the company by decreasing the rates paid and increasing the time the company has to pay the obligation back Alternative available to Indian companies is to restructure the terms of the FCCB in consultation with the bondholders May provide a temporary relief to the issuing companies
  5. 5. Reprising of FCCB Bonds Government has allowed Companies to reprice their FCCB with QIPs Companies can use the last two weeks’ average price as the minimum conversion price. Conditions Approval of the board and its shareholders for reprising Pricing should not breach FDI limits Fresh agreement with FCCB holders Approval by the RBI
  6. 6. Redemption Call FCCB CMP Amt Maturity Conversio Diff ** (Rs ) * ($ mln) date n (%) price (Rs)Panacea Biotec 210 36.8 Feb 11 358 -41.3Amtek India 64 47.0 Oct 10 120 -46.5Bharati Shipyard 272 46.9 Oct 10 498 -45.33i Info 68 20.2 Mar 11 115 -41.0Bajaj Hind 129 99.6 Feb 11 465 -72.4HCC 63 100.0 Mar 11 248 -74.7Videocon Ind 263 42.3 Feb 11 449 -41.4Amtek Auto 167 136.1 June 11 210 -20.6Aban Offshore 813 66.1 Apr 11 2789 -70.8India Cement 115 75.0 May 11 306 -62.5Jubilant Life Sci. 313 142.1 May 11 413 -24.2Glenmark Pharma 324 30.0 Jan 11 583 -44.4Punj Lloyd 125 49.7 Apr 11 273 -54.0
  7. 7. Thank you!!!