The Hindu Business Line : PVR Cinemas puts FCCB plans on hold

New Delhi, Aug. 21 Tight international liquidity conditions and the Reserve Bank of India’s recent guidelines restricting rupee expenditures out of the external commercial borrowing (ECB) proceeds have seemingly prompted PVR Cinemas to put on hold its plans to raise $30-35 million through Foreign Currency Convertible Bonds (FCCB).

“We don’t need the money right now. We have enough funds tied up through both debt sanctions and cash from internal accruals to fund our immediate expansion plans,” said Mr Nitin Sood, GM, Corporate Finance, PVR Cinemas. He cited the RBI’s new guidelines restricting only up to $20 million of ECB proceeds for use in rupee expenditure as a factor behind the change in plans.

There is also a perception that ECB funds in the current global context may not come as cheap as they were till very recently. Also, over the last one week, the rupee has weakened against the dollar, thereby raising further the cost of foreign loans. The company’s board had already approved the plans to issue FCCBs.

The board had also approved raising PVR Cinemas’ foreign institutional investors’ shareholding limit to 50 per cent. “We have been receiving a great deal of interest from FIIs. We are the only ones in our space with as much as 32 per cent FII shareholding already,” said Mr Sood.

Although PVR Cinemas is in talks with several investors, Mr Sood pointed out that the board’s approval with regard to FCCBs and FIIs was only an “enabling decision”.

With the recent launch of Ludhiana multiplex in Punjab, PVR Cinemas has taken its screen count to 89 across 14 cities.

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