Hindustan Construction redeems $133-m FCCBs

PTI Mumbai | Updated on November 12, 2017

Hindustan Construction Company has paid $133.03 million to bond holders towards redemption of the entire outstanding Foreign Currency Convertible Bonds (FCCBs).

The total amount of $133.03 million comprises nominal value of the bonds of $96.6 million and redemption premium of $36.43 million, the company said in a statement today, adding that the redemption price was 137.71 per cent of the principal amount.

The statement further said that the repayment has been funded out of the internal resources of the company.

The HCC Chairman, Mr Ajit Gulabchand, had earlier said that the company has a portfolio of about Rs 550 crore in FCCBs and it is ready to pay back the investors, in case the FCCBs do not get converted into equity.

“In the event, if the FCCBs do not get converted, we will repay them (investors) and we are fully prepared to repay them with sufficient internal accruals and cash available with us,” he had said.

To access cheap foreign currency debt, many mid-cap companies like HCC issued FCCBs in 2005-06 and provided their holders the option to convert the bonds into equity within the pre-determined period and price.

FCCBs are zero-coupon bonds and companies have to pay the redemption amount, along with the compounded interest. Under accounting principles, repayment to FCCB holders will entail the company charging the interest paid to the profit and loss account, thereby impacting profits in that fiscal to that extent.

Published on April 01, 2011

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