FCCBForeign 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

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

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

Restructuring of FCCBs

Restructuring is the reorganization of a company's

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

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.

ConditionsApproval of the board and its shareholders for

reprisingPricing should not breach FDI limitsFresh agreement with FCCB holdersApproval by the RBI

Redemption Call

FCCB

CMP(Rs ) *

Amt ($ mln) 

Maturity date

Conversionprice (Rs) 

Diff **(%)

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

Thank you!!!