Debt-laden Vodafone Idea Cellular has managed to pay ₹2,850 crore to seven bond holders including mutual funds and banks as full and final settlement including interest, averting any fears of a default.

Franklin Templeton India has received ₹1,252 crore, while Nippon India Mutual Fund and UTI Mutual Fund have got ₹121 crore and ₹161 crore. The names of the other four bond holders, which received the payment, could not be confirmed.

Mutual funds are in the eye of storm ever since large corporates started defaulting on their debt obligations.

In February, most mutual funds including Franklin Templeton Mutual Fund, Nippon India Asset Management Company and UTI Mutual Fund had side-pocketed the investment in Vodafone Idea Cellular which was one the verge of going bankrupt. Debt investors were issued units in segregated account which was holding the non-performing assets.

As a blessing in disguise the Covid pandemic has helped telecom companies increase revenues as subscribers are consuming more data.

Exposure to Voda Idea

As of February, debt mutual funds had a combined exposure of ₹3,390 crore to Vodafone Idea. In June, Vodafone Idea had paid Franklin Templeton ₹103 crore, while Nippon India Hybrid Bond Fund had received ₹9.31 crore. UTI Mutual Fund had received ₹13.5 crore.

In the latest round of payments by the telecom company, Franklin Templeton has received ₹1,252 crore as full and final settlement of its investment made through six debt schemes that are in the process of being wound up. Franklin Templeton Ultra Short Bond Fund has received ₹804 crore while low duration fund and short-term income plan have got ₹198 crore and ₹86 crore. Credit Risk, Dynamic Accrual and Income Opportunities funds have received ₹22 crore, ₹96 crore and ₹47 crore, respectively.

“We wish to inform that further to the annual interest payment received on June 12 for the security ‘8.25% Vodafone Idea’ held in the segregated portfolios, we have now received the full value of the principal due, along with interest for the period June 12 to July 9,” said Franklin Templeton in a statement on Friday.

The amount will be distributed to unitholders of the segregated portfolio and outstanding units held by unitholders will be extinguished, it added.

For units held in physical/statement of account mode, all outstanding unitholding as on July 10 will be extinguished and the amount will be distributed to unitholders by July 14, said Franklin Templeton India.

Similarly, all outstanding unitholding held in demat mode as on July 17 (record date) will be extinguished and the amount will be distributed to unitholders by July 20, it added.

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