Pharma major, Orchid Chemicals and Pharmaceuticals announced, on Tuesday, that it had redeemed the outstanding foreign currency convertible bonds (FCCBs) aggregating $ 167.64 million on the due date, February 28.
These bonds were issued in February 2007 at a coupon rate of 7.2 per cent.
According to K. Raghavendra Rao, Chairman and Managing Director, the company could redeem the FCCBs in time without affecting the capital structure or replacing the entire outstanding amount by way of debt.
The funds needed for the redemption were met through the mobilisation of resources to the extent of $96.5 million through external commercial borrowings (ECBs) from a consortium of three banks and the balance from internal accruals.
Coupon rate
The terms under which the ECBs were raised were more beneficial to the company than that of FCCBs, Mr. Raghavendra Rao said.
The coupon rate for ECBs works out to LIBOR (London Inter-bank Offered Rate, which is around 0.8 per cent now) plus 460 basis points and the tenure is seven years.
FCCBs of a number of companies are maturing this year. Most of these companies are busy raising resources, mostly through external commercial borrowings (ECBs), to redeem their FCCB obligations.
A few companies have already initiated steps to raise resources through external commercial borrowings.
Reliance Power of the Anil Ambani group had redeemed an outstanding amount of Rs. 1,474 crore ($299.90 million) in October last year.
Reliance Communications has made arrangements to refinance FCCBs worth Rs. 5,825 crore ($1,182 million) due for redemption on
March 1. The funds will be provided by Industrial and Commercial Bank of China, China Development Bank and Export Import Bank of China, the company said in a filing to the Bombay Stock Exchange recently.
More to follow
Tata Motors, Tata Steel, Jaiprakash Associates, Suzlon Energy and JSW Steel are among the large companies which raised FCCBs that are due for redemption during the year.
