The F Word That's Laid India Inc Low ; the Time-Bomb of Foreign Currency-Denominated Debt has Been Ticking for Some Time Now and Some of India's Best-Known Companies Are at the Doorstep of a Default.
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Summary
Rs 545 crore: the blob of debt the Mumbai-headquartered Wockhardt Ltd has to wipe out. Six months: The time it has to do that. Circa 2004: The year the pharma major's current woes can be traced back to. Of course, the scenario didn't look so gloomy then. When the company raised $110 million from the global markets five years ago by floating foreign currency convertible bonds (FCCBs), the management perhaps never thought it would have to repay it one day. Any FCCB issuer would hope its bonds would get converted into equity. But with its stock price today (as on May 6) quoting at just 18 per cent of the conversion price fixed then, the bond holders will be in no hurry to rush to Dalal Street. The nervous drug- maker, hit by Rs 139 crore losses for the year-ended December 2008, is desperately seeking out ways to rid itself of the FCCB albatross before it comes up for redemption in October this year.
A Wockhardt spokesperson says a clear picture on how the company would deal with the FCCB payout will emerge once the corporate debt restructuring (CDR) taken up by a clutch of banks is through. Wockhardt isn't the only Indian company that's been laid low by the FCCB time-bomb. A host of Indian companies, which range from pedigreed large-caps like Tata Motors, Videocon Industries and Suzlon Energy, to their lesser-known counterparts like Aksh Optifibre, Subex Ltd and Marksans Pharma, are staring down the FCCB barrel.See the full content of this document
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The F Word That's Laid India Inc Low ; the Time-Bomb of Foreign Currency-Denominated Debt has Been Ticking for Some Time Now and Some of India's Best-Known Companies Are at the Doorstep of a Default.
With the current market price of almost all these companies nowhere near their conversion price CRISIL has come up with a list of around 45 companies where the market price as a percentage of the conversion price is lower than or at 20 per cent as of end-March a number of these promoters are in a spot.FCCBs are essentially foreign currency-denominated debt with a maturity period of three- to-five years. The investor has the option o...
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