FCCB - TimeBomb Waiting to Explode
Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Fundamental
Forum Discription: Discuss the operations and finances of any of your companies.Make the other participants aware on the investment opportunities available in a stock on PE free cash flow etc
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2044
Printed Date: 23/Apr/2024 at 9:25pm
Topic: FCCB - TimeBomb Waiting to Explode
Posted By: vijaygawde
Subject: FCCB - TimeBomb Waiting to Explode
Date Posted: 26/Jan/2009 at 4:42pm
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FCCB - TimeBomb Waiting to Explode
Stock prices of companies issuing FCCBs having fallen below their conversion price, and redemption looks likely. For many, this is a time-bomb
The equity market has witnessed a dramatic change. Two years ago, stocks flared up merely on talks of companies issuing foreign currency convertible bonds (FCCBs). Now investors shiver on thinking about the FCCB exposure of Indian companies. At that point, FCCBs were considered a very convenient and quick way of raising funds for organic and inorganic expansion. It was possible to raise funds through FCCBs at competitive interest rates compared with interest rates prevailing in the Indian market. The massive plunge of the stock market and the rupee depreciation against the US dollar has completely changed the equation for FCCB-issuing companies. This unexpected turn of events has caught many Indian companies on the wrong foot. Indeed, FCCBs have actually become a major headache for the issuing companies. All the assumptions of the issuing companies have gone haywire and have put the financials of these companies in doldrums. Indian companies issued FCCBs worth US$ 20 billion, or around Rs 90000 crore at an exchange rate of Rs 45 per US dollar, over the last five years, according to research firm CLSA. The fear is that a few companies could even face bankruptcy owing to the FCCB burden if they do not manage to find an intermediate solution to defuse the FCCB time-bomb. Most FCCBs would start maturing in the next two to two-and-a-half years. With most companies trading way below the conversion price, redemption seems to be likely unless prices recover. The first company to face FCCB redemption would be Mumbai-pharmaceuticals company Wockhardt. Interestingly, the FCCB fiasco is not happening for the first time. It also happened in 2005-2006, when the market witnessed a correction. Indeed, the popularity of FCCBs to raise finance has swung along with the fortunes of the equity markets. This time, the situation is really grim. In a couple of cases, funds repayable on FCCB redemption exceed the market capitalisation of the company. For instance, Subex requires around Rs 720 crore (US$ 180 million) to meet its FCCB redemption commitment. Its stock is down by over 90% from its 52-week peak with a market capitalisation of around Rs 120 crore. Even worse, the company has reported a loss of over Rs 6 crore in the latest financial year ended March 2008 (FY 2008) compared with a profit of Rs 20 crore in FY 2007. Sales declined 32%. The company generated a mere Rs 10 crore from operating cash-flow, which is not sufficient to meet its heavy FCCB redemption requirement. Though the company can draw solace from the fact that the FCCBs are redeemable in March 2012, the conversion price of Rs 656.20 per share is too high considering its shares are languishing in the range of Rs 30-Rs 40. As per the terms and conditions of the redemption, the company would have to pay interest at the rate of 8% per annum calculated on a semi-annual basis. The coupon rate on these bond is 2%. Thus, the premium on redemption is 6%. This will essentially mean extra cost for the company if the bondholders opt for redemption, which is likely. Subex is writing off or charging the redemption premium to the securities premium account over the life of the bonds. Likewise, it has charged Rs 59.99 crore as redemption to the securities premium. Had the company charged this redemption premium to profit and loss (P&L) account, its loss for FY 2008 would have been higher by this much amount: loss of around Rs 80 crore instead of Rs 20 crore in FY 2008. One of the solutions for the issuing companies to prevent a bust is to consider reduction in the conversion price. However, reduction in the conversion price has two different sets of problems. First, it would lead to higher dilution if the bond holders decide to convert bonds into shares. This is assuming the share price would reach the conversion price till maturity of the FCCBs. The stocks have been so badly hammered on the trading floor that reaching even the revised conversion price also looks a distant possibility. Thus, redemption of bonds on maturity looks inevitable. For instance, Core Project & Technologies reset the conversion price of its FCCB to Rs 82.86 from Rs 165.70. Against the original conversion price, the stock is trading at a discount of 63.9%. Compared with the reset conversion price, the stock is hovering at a discount of 28%. Though revising the conversion price is definitely one of the solutions, it could fail to do the magic if the stock market conditions remain bearish for a longer period. Promoters held a 47.69% equity stake end September 2008. For companies where promoters do not have a sizable equity stake, revising downwards the conversion price is not an option as it would invite a hostile takeover. A higher quantum of dilution could adversely impact the earning per share and, eventually, P/E valuation, making the stock expensive compared with its peers. Redemption would not happen simply because the stock has touched or trading at the conversion-price level. This is because the stock price has to be substantially above the conversion price to take care of redemption premium that the bondholder is eligible for at the time of maturity. The probability of conversion improves if the market is bullish and bondholders are reasonably sure that they can make money on conversion into equity. Companies with FCCBs maturing in the near future are running from pillar to post to raise money to fund redemption. For instance, Wockhardt is evaluating all the possible options to raise money right from selling off its assets, tapping private equity (PE) players and so on. In fact, raising money in this market is extremely difficult, particularly after the fall of Lehman Brothers. The options that are available to companies to augment resources to redeem FCCBs are either limited and or not economically feasible in the current market scenario. The major options include internal accruals, fresh FCCBs or external commercial borrowings (ECBs), raising debt from the domestic market and equity dilution. Internal accruals would be limited in a slowing domestic economy. Developed economies are also in a recession. Issuing of FCCBs is, thus, almost closed as investors have turned risk-averse. Equity dilution is an option, but promoters would not be keen as this will fetch lower valuation. Too much of dilution will be detrimental to the interest of the existing shareholders. Raising money from the domestic market would increase the interest burden. A few companies could dip into the red purely due to higher interest expense. Many companies such as Subex and Aurobindo Pharma have a highly leveraged balance sheet and raising fresh debt would be troublesome. Many companies have used the FCCB proceeds for organic expansion, which could be under implementation. These projects would take time to contribute to the bottom line, and increase the fixed cost, adversely impacting the P&L account. Already, research and brokerage houses have started giving ‘sell’ recommendation on companies stuck with FCCBs. The FCCB burden could be extremely cumbersome for small- and mid-sized companies. This is very much evident from figures (see table: Non-convertible pain). A few companies have a high debt to equity ratio. These include Orchid Chemicals & Pharmaceuticals (3.01), SpiceJet (4.57), Kinetic Engineering (14.86), Gayatri Projects (2.31), Era Infra (2.99), Hotel Leela Ventures (2.13), Zenith Infotech (2.74), Dolphin Offshore (2.29), Ankur Drugs (3.07), and GTL Infrastructure (2.76). They would find it extremely difficult to raise further debt to fund FCCB redemption. Moreover, a few companies such as Dolphin Offshore have a negative cash-flow from operating activities. Owing to the massive plunge since the market started its descend in January 2008, shares of many companies have been hit so badly that their market capitalisation is far less compared with their total debt. For example, Kinetic Engineering’s total outstanding debt end March 2008 is 10 times higher compared with its market capitalisation. Other companies include Orchid Chemicals & Pharmaceuticals (2.7 times), Gayatri Projects (4.4 times), Kamat Hotels (3.9 times), Prithvi Information (4.7 times), Subex (7.6 times), Ankur Drugs (3.4 times), and Pyramid Saimira Theatres (3.4 times). (For this comparison, market capitalisation on 6 January 2009 has been taken into account.) Accounting treatment has saved the day for companies with FCCB exposure. Companies are exploring provisions in the Companies Act, 1956, to hide the losses from FCCBs. Presently, most companies are charging expenses related to the issue of FCCBs and premium payable on redemption of FCCBs to the securities premium account. The securities premium account is a sub-head that comes under, ‘Reserves and surplus’, appearing on the liability side of the balance sheet. This accounting treatment is in sync with Section 78 (2) of the Companies Act, 1956. However, as a prudent accounting practice, this entry should be disposed of through the P&L account. By not doing so, companies completly keep their losses arising from FCCBs under wraps. Under Section 78 (2), a company just needs to pass a book entry: debit the securities premium account and credit provisions for premium payable on redemption of FCCBs. Companies, in fact, need to create a separate provision account for premium payable on redemption of FCCBs. Apart from showing higher profit, anther bigger problem with this treatment is that the company could pay dividend out of such profit and carry out other activities, which could drain cash from its balance sheet. When FCCBs become due for redemption, the company could have provision for premium payable on redemption but not enough hard cash to honor its financial commitment. This way, the company would have no option in future but to raise money from the market, one way or the rather, to repay the FCCBs. FirstSource is one such company that has taken shelter under the Companies Act, 1956. It has not charged FCCB related cost to the P&L account. Instead, this has been treated in the balance sheet. This has enabled the company to report a decent profit. First Source raised US$ 275 million in FY 2008 through the issue of zero-coupon FCCBs to fund the acquisition of MedAssist Holding. As per the FCCB term sheet, bonds are convertible into equity shares at price of Rs 92.2933 per share at the option of the bondholder at any time from 14 January 2008 up to 23 November 2012. If the entire FCCB is converted into shares, the company will need to issue 117.0 million shares at a predetermined price. Further, if the bonds are not converted into shares, they would be redeemed to bondholders on maturity on 4 December 2012 at an yield to maturity (YTM) of 6.75% per annum. As per the annual report of FirstSource, "these FCCBs are considered monetary in nature and premium payable on redemption of FCCBs is fully charged to the securities premium account in the period of issue, and the liability so created is reflected under provisions. This charge will be reversed if and when the FCCB holders opt to convert the bonds into equity at any time before the bonds are due for redemption." Thus, the company has created a separate provision account, ‘Premium payable on redemption of FCCB’, and provided Rs 434.37 crore through debiting securities premium account. Further, it has also written off expenses incurred for issue of FCCBs amounting to Rs 21.74 crore through the securities premium account. It reported a consolidated profit of Rs 130 crore in FY 2008. This comfort is available to only those companies with a substantial balance in the securities premium account. Else, companies would have to charge the expenses related to FCCBs to the P&L account. Of the 91 FCCB issues, only in six instances are the stocks trading at a premium compared with the conversion price. Five are trading at over 90% discount to the conversion price. This means, these stocks should appreciate at least 10 times from the current level for bondholders to opt for conversion of FCCBs into equity shares. Further, 29 FCCBs are at over 75% to 90% discount to the conversion price, while in 34 instances the share price is at a discount between 50% to 75%. Subex (94.9%), Nectar Lifescience (92.3%), Pyramid Saimira Theatres (90.9), Era Infrastructure (90.8%) and Prithvi Information (90.7%) are currently trading at over 90% discount to their FCCB conversion price. Unless the stock price recovers, which would be not less than a miracle, these companies would have to gear up for redemption of FCCBs. Besides Amtek Auto, Bharat Forge, Tata Motors, Bharti Shipyard, Easun Reyrolle, Suzlon Energy, Aftek, First Source Solutions, Aurobindo Pharma, Prime Focus, Bajaj Hindusthan and Moser Baer are trading at a discount of over 80% compared with the FCCB conversion price. On the positive side, a handful of firms — is Glenmark Pharmaceuticals, Lupin, HDFC, Tata Power and Sterling Biotech — are trading at a premium to the conversion price. It would be prudent for the retail investors to look at the extent of debt in the balance sheet and exposure to FCCBs before investing in a stock. Focusing on the utilisation of funds raised through FCCBs should also provide good insights into whether the company would able to cope up with the crisis on or not. The companies that have utilised FCCB proceeds to fund inorganic growth or acquisition at exuberant valuation could be in for a spell of trouble. As the business confidence would take some time to restore, expensive buyouts of heydays would not yield the desired results, putting a further strain on the cash-flows and earning. ------------- Diversification is protection against ignorance, it makes little sense for those who know what they’re doing. |
Replies:
Posted By: vijaygawde
Date Posted: 26/Jan/2009 at 4:46pm
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------------- Diversification is protection against ignorance, it makes little sense for those who know what they’re doing. |
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Posted By: kumardiwesh
Date Posted: 26/Jan/2009 at 6:12pm
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Should we avoid investing in all these companies? ------------- "History does not tell you the probability of future financial things happening" - Warren Buffett |
Posted By: vijaygawde
Date Posted: 26/Jan/2009 at 6:36pm
HDFC and Tata Power are the only two companies in above list where CMP is higher than the conversion price.
I would avoid all other companies where thare CMP is quoting at deep discount to conversion price. ------------- Diversification is protection against ignorance, it makes little sense for those who know what they’re doing. |
Posted By: vijaygawde
Date Posted: 26/Jan/2009 at 6:54pm
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ABC of FCCBs: A depreciating rupee and weak stock market put issuers, banking on a strong rupee to limit foreign exchange outflow and buoyant stocks to discourage conversion, in a fix
A foreign currency convertible bond (FCCB) is a quasi debt instrument that is issued in a currency other than the issuer’s domestic currency. Over the last five years, a majority of Indian companies issuing FCCBs raised funds in US dollars, followed by euro, yen and pound. FCCBs could have a coupon rate of zero (no interest rate) but have yield on maturity. Or FCCBs could also carry lower interest rate and yield on maturity. Yield can be termed as premium payable on maturity. This is a bullet payment of interest at maturity if the bondholder opts for redemption. Interest payable on bonds is also called as coupon rate. The key feature of FCCBs is that the interest is guaranteed and the bondholder also gets the option to convert the bond into equity. The coupon rate is payable at periodic intervals as agreed between the issuer and the bondholder. The holder of FCCBs has the option to convert the bonds into equity within the stipulated timeframe. Thus, FCCBs have the flavor of both debt and equity. If the bondholder opts for conversion, he would receive shares of the issuing company at a predetermined or rather the rate agreed at the time of subscribing to the FCCB issue. This is known as the conversion price. The FCCB conversion price is generally at a substantial premium to the market price prevailing at the time of the issue. If the share prices fail to breach the conversion price, the bond holder can opt for redemption of bonds on maturity. This is what is most likely to happen in the current market scenario, where domestic issuing companies could be in a lurch if share prices remain subdued. Apart from redemption, which will stress cash-flows, the issuing companies would also have to pay redemption premium (interest payable on bonds at maturity). The structure or rather terms and conditions of the FCCB vary from company to company. For example, some FCCBs have a reset clause allowing the conversion price to be reset at a lower level based on certain contingencies such as the stock coming down below a level defined in the FCCB agreement. Low-cost airline SpiceJet is a case in point. Owing to the market meltdown, the company reduced its FCCB conversion price twice from Rs 90 to Rs 57 and, recently, from Rs 57 to Rs 25. In this case, it would have to issue 3.5 times more shares on conversion. This would bloat the equity base, which would be difficult to service. SpiceJet has reported losses in the last five years. Whenever the company breaks even, its EPS would be negligible and so also its P/E valuation. Simply put, existing shareholders would suffer if the conversion price is reset and dilution is on the higher side. FCCBs were selling like hot cakes as overseas investors were keen to reap the benefits of conomic prosperity in the emerging markets including India. This is a very safe bet for overseas investors who enjoy the option of redeeming the bond if the stock moves south contrary to expectation. For the issuing companies, FCCBs emerged as a key source of raising finance in quick time at very low interest rates due to the option to convert into equity. Besides, the Indian rupee The weakening of the Indian rupee against the US dollar has compounded the woes of the issuing companies. As FCCBs are payable in foreign currencies (US dollars in most cases), companies would have to buy expensive dollars to pay interest or redeem them. Certain companies have used the FCCB proceeds to acquire companies in the overseas market, which acted as natural hedge to take care of the fluctuation in the currency due to FCCB proceeds and usage being the same currency: the US dollar. ------------- Diversification is protection against ignorance, it makes little sense for those who know what they’re doing. |
Posted By: vijaygawde
Date Posted: 26/Jan/2009 at 6:56pm
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A lifeline: Issuers can opt for premature redemption of FCCBs
The Reserve Bank of India (RBI) came out with a notification on 8 December 2008, allowing premature buyback of foreign currency convertible bonds (FCCBs). The buyback can be done through internal accrual or existing foreign exchange holdings of the company. Further, the RBI has mandated that the entire process of buyback should be completed by 31 March 2009. Following are the two routes allowed by the RBI along with key terms and conditions: Automatic Route: The company requires prior permission from the RBI for buyback of FCCBs and should satisfy the following conditions to explore this route: * Buyback value of the FCCB is at a minimum discount of 15% on the book value * Funds used for the buyback are to be out of the existing foreign currency funds held either in India [including funds held in Exchange Earners’ Foreign Currency Account (EEFC) account] or abroad and/or out of fresh external commercial borrowing (ECB) raised in conformity with the current ECB norms Approval Route: This route requires prior permission from the RBI. Further, the company interested in buyback should fulfill the following conditions: * The buyback value of the FCCB is at a minimum discount of 25% on the book value * Funds used for the buyback are out of internal accruals, to be evidenced by statutory auditor and designated AD Category–I bank’s certificate * Total amount of buyback does not exceed US$ 50 million of the redemption value per company. Though many mid- and small-caps would find it difficult to fund FCCB buyback through internal accruals due to inadequate profit, this move by the central bank is a step in the right direction. However, the amount allowed to be bought back is too little. This facility by the RBI offers good opportunity for companies to retire some of their FCCB commitments and keep their balance sheet in the right shape. For overseas investors such as hedge funds that are stuck with liquidity crisis, the buyback could offer some amount of cushion to. A few companies are considering this option to reduce their FCCB exposure. ------------- Diversification is protection against ignorance, it makes little sense for those who know what they’re doing. |
Posted By: kumardiwesh
Date Posted: 26/Jan/2009 at 7:04pm
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Could you also post the links to all the articles? ------------- "History does not tell you the probability of future financial things happening" - Warren Buffett |
Posted By: vijaygawde
Date Posted: 26/Jan/2009 at 7:19pm
This is from http://subscribers.capitalmarket.com/ - Capital Market - Subscriber only website
------------- Diversification is protection against ignorance, it makes little sense for those who know what they’re doing. |
Posted By: basant
Date Posted: 26/Jan/2009 at 8:12pm
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I hope you do not get affected by any copyright provisions. Just check that before posting that.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: vijaygawde
Date Posted: 27/Jan/2009 at 7:19pm
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http://www.mydigitalfc.com/banking/firms-queue-rbi-nod-buy-back-fccbs-561 - Firms queue up for RBI nod to buy back FCCBs
Companies want to get back the investments and extinguish threat
Around 20 companies have lined up for Reserve Bank of India (RBI) approval to buy back foreign currency convertible bonds (FCCBs) that are yet to come for conversion.
A substantial fall in share prices of various companies that have issued FCCBs and panic calls from bond holders and the increasing difference between the pre-fixed conversion price and present equity price have forced many companies to buy back FCCBs and extinguish them.
On account of the recent credit crunch, FCCBs issued by Indian corporate firms are at present trading at very high yields, reflecting the prevailing risk perception. There can be significant benefits to the company concerned as well as to the economy if corporate firms buy back their FCCBs at prevailing discounted rates.
“Companies such as Alok Industries, Bhagyanagar Metals, JBS Industries, Gravel India, Wanbury, Radico Khaitan, Vardhaman Textiles and Aurobindo Pharma have applied to RBI for buying back FCCBs,” said Nimish Shah, managing director, Fortune Financial Service India (FFSIL).
So far, Reliance Communications has managed to extinguish debt worth $35 million in two tranches on December 29 and January 21 respectively.
Naresh Kothari, co-head, institutional equities, Edelweiss, told Financial Chronicle, “Three factors are holding back companies from buying back FCCBs. First, the price. Second, the sellers realising the downside of buyback, and third, the lack of liquidity.”
In December, RBI had allowed cash-strapped companies to utilise their rupee resources up to $50 million for the premature buyback of foreign bonds. The buyback for each company would cost anywhere between $10-50 million, based on the debt they have incurred. For the buyback, RBI is offering a discount up to 25 per cent on the book value. This buyback can be availed only till March of this year.
According to an Edelweiss report on FCCBs released in December, as of September 30, 2008, 74 companies in the BSE 5001 had FCCB outstanding aggregating $10.9 billion. “We estimate that for 61 companies, the probability of FCCBs being converted into equity is low, given the gap between present stock prices and effective conversion price,” the report said. ------------- Diversification is protection against ignorance, it makes little sense for those who know what they’re doing. |
Posted By: dee007pak
Date Posted: 24/Jun/2009 at 1:50am
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Vijay So you would recommend staying away from Tata Motors and Tata Steel based on their FCCB commitments? Deepak  -------------  “ Money talks… but all mine ever says is good-bye.” -Anon
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Posted By: Mr. V
Date Posted: 16/Sep/2009 at 9:08pm
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Hedge Funds seek closure of Venus Remedies on FCCB default US-based hedge funds DE Shaw and Citadel Investment Group have filed a winding-up petition against Venus Remedies, after the Chandigarh-based company defaulted on a foreign currency convertible bond (FCCB) issue. This is the first time that an Indian company is slapped with a winding-up petition — a formal request to a court for the compulsory liquidation of a company — by FCCB investors. “This is a case of wilful default by the company. It has money, but is not willing to pay bondholders. That is why we have filed the winding-up petition,” said an executive with one of the hedge funds. Since the market price of Venus was much below the conversion price of Rs 437, investors did not want to convert it into shares, said the executive, requesting anonymity. The Bank of New York Mellon, the custodian for the FCCB issue, has filed the case in the Punjab and Haryana High Court in Chandigarh. Investors have also sought the court’s intervention to stop the company from paying dividends. The case will come up for hearing in October. The court decision on Venus Remedies will be important, since FCCBs are unsecured instruments, and it can have a major impact on future FCCBs by Indian companies. Source = http://economictimes.indiatimes.com/News/News-By-Industry/Banking/-Finance-/Finance/Hedge-funds-seek-closure-of-Venus-Remedies/articleshow/4992536.cms" |
Posted By: Vivek Sukhani
Date Posted: 20/Sep/2009 at 7:49pm
Am surprised this has not caused an outrage. I am reading this for the first time, and this is looking pretty awful and disgusting.
Although, we have to be critical of Venus remedies but the FCCB holders dont deserve any sympathy as well. This is the ugly side of corporate greed.
Hope this leads the FIIs to do their home-work more diligently before they subscribe to such issues in future. ------------- Jai Guru!!! |
Posted By: deepinsight
Date Posted: 20/Sep/2009 at 8:45pm
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A lot of FFCB were reneged and bought bavk by companies at a discount.
It looks more like a hard negotiation more than anything else. ------------- "Investing is simple, but not easy." - Warren Buffet |
Posted By: Vivek Sukhani
Date Posted: 20/Sep/2009 at 10:40pm
Well, repurchase of FCCB is applicable for FCCBs before their 'in-tenure' FCCBs. After the period is over, the company should repurchase the unconverted lot at face value+agreed premium on redemption. ------------- Jai Guru!!! |
Posted By: rakeshmehta48
Date Posted: 22/Sep/2009 at 9:16pm
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Many a times, the issuer and holder of FCCB, both are greedy lot.
The small investor being ilinformed suffers, when he runs after their greed. ------------- Fund Management is Most Important |
Posted By: rakeshmehta48
Date Posted: 26/Sep/2009 at 9:45pm
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Companies are again planning to raise funds via FCCB route.
Who cares about Forex and MTM risks?
In fact, it's possible that forex and mtm risks, may turn out to be profitable in future. It all depends how Indian Rupee behaves. ------------- Fund Management is Most Important |
Posted By: Vivek Sukhani
Date Posted: 28/Sep/2009 at 1:21pm
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http://www.livemint.com/2009/09/27225753/Bond-defaults-begin-to-emerge.html?h=B - http://www.livemint.com/2009/09/27225753/Bond-defaults-begin-to-emerge.html?h=B ------------- Jai Guru!!! |
Posted By: venkat
Date Posted: 28/Sep/2009 at 2:18pm
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The rupee is expected to move to 35-40 Rs per dollar by the next decade. IT cos will face termendous margin pressures.
A strong rupee encourages the people of a country and it's entrepreneurs to bring about productivity improvements rather than just tinkering with the exchange rates. It enables a country to have a limit on it's imports and not to overpay on them and underreceive on receivables or exports. Michael Porter with his insightful analysis has laid that an appreciating currency is in one's interests.
The labour force of india especially the NREGA all it does is dig roads and other tasks which are as good as revenue expenditure as these roads would not exist till the next monsoon. The food inflation that we are experiencing is not going to go away. ------------- Life is always a fight....to finish at the start line. Problem-Use challenge, Tension-Use excitement,Ican't-Use i can,avoid no at the beginning of sentence. |
Posted By: shivkumar
Date Posted: 28/Sep/2009 at 5:24pm
| why name the industrialist and invite defamation suits? |
Posted By: Joseph1974
Date Posted: 17/Nov/2011 at 3:05pm
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Hi - Does anyone know if Indian retail investors can invest in FCCBs? If so, how?
Joe ------------- Joe |
Posted By: amol.karale
Date Posted: 17/Nov/2011 at 10:44pm
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Do you mean FCCB's issued by non Indian Companies? ------------- Amol |
Posted By: Joseph1974
Date Posted: 17/Nov/2011 at 1:23am
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Amol - I wanted to check if Indian retail investors could invest in FCCBs issued by Indian companies.
J ------------- Joe |
Posted By: subu76
Date Posted: 03/Dec/2011 at 10:17am
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How do FCCB holders recognize revenues? Various FCCB issues seem like teaser loans to jobless folks. It's like asking the incorrigible alcoholic to mind the bar. Managements dutifully raised as much money as possible through FCCBs by projecting a glorious future and then siphoned off the money through capex, acquisitions in foreign countries and I'm sure through plain pilffering. (read money parked in opaque foreign banks) Such managements have also pledged away most of the management stock holding so they'll not hold the bag and they also got to raise a lot of money.
I doubt any ordinary banker type of evaluation would have passed muster. Given this i suspect the investment bankers always expected a bunch of these FCCBs to explode but they got to collect their fees and bonuses upfront so they probabily never cared.
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Posted By: subu76
Date Posted: 03/Dec/2011 at 10:47am
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Prajay is a perfect example. They raised FCCB money in 2005 and 2006 (worth $60 million) Now the market cap of the company is 32 cr only. They actually "lost" account of a project.  Hard to believe this kind of nonsense is tolerated in our country
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Posted By: zulfi
Date Posted: 03/Dec/2011 at 10:54am
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means they raised more than its market cap, @what price they were to b converted?
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Posted By: subu76
Date Posted: 03/Dec/2011 at 11:22am
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Not sure about the conversion price but clearly it would have had to be much more.......the stoc price collapsed from Rs 380 to Rs 4.5 |
Posted By: rohit1889
Date Posted: 03/Dec/2011 at 11:32am
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If a company fails to repay FCCB loans, will it have to file for bankruptcy ? ------------- If you're prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won't get bored. |
Posted By: subu76
Date Posted: 03/Dec/2011 at 11:40am
| The bond holder can file for winding down but you know how much time such things take in India... |
Posted By: zulfi
Date Posted: 03/Dec/2011 at 11:54am
| thanx |
Posted By: frankabegnale
Date Posted: 11/Dec/2011 at 1:16am
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Posted By: frankabegnale
Date Posted: 11/Dec/2011 at 1:20am
I have read about RBI decreasing the minimum discount rate so that the buyback becomes attractive to the bond holder too but i failed to follow as to how would decreasing the disc price make the buyback deal attractive to the bond holder?? 
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Posted By: Joseph1974
Date Posted: 12/Dec/2011 at 12:19pm
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Does anyone know how a retail investor can invest in these FCCBs? ------------- Joe |