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Karnataka HC to hear Franklin Templeton case on July 15

Suresh P Iyengar Mumbai | Updated on July 13, 2020 Published on July 13, 2020

The Karnataka High Court has directed all parties that have raised objection to winding up of six debt schemes of Franklin Templeton to file their rejoinder by July 29.

The next hearing is scheduled on July 15.

As directed by the Supreme Court Franklin Templeton had filed petition for abruptly winding up six of its debt schemes before the Karnataka High Court and it was taken up for consideration on July 8.

The e-voting and the unitholders meet continue to remain suspended till directed by the Court. Active monetisation of assets of the schemes and distribution of investment proceeds to the unitholders will be possible only after successful e-voting, said Sanjay Sapre, President, Franklin Templeton Asset Management (India) in a note to investors.

On the concern raised by drop in NAV in some of the funds since June-end, Sapre said it was due to maturity date reset for the securities of Edelweiss Rural & Corporate Services.

The independent valuation agencies typically value these interest rate reset securities considering the next interest rate reset date as the maturity date. The impact on the NAV is due to valuation provided by the valuation agencies due to reset of maturity date to the next rate reset date (June 30 2022). Franklin Templeton is continuously monitoring the developments in this regard and engaging with the issuer for early repayments, he said.

The six schemes under winding up continue to receive cash flows. Between June 16 and 30, the six schemes have received an additional ₹1,311 crore from maturities, pre-payments and coupon payments. This takes the total

amount received since April 24 to ₹3,275 crore. And this amount has been received without the ability to efficiently monetize assets, he added.

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Published on July 13, 2020
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