- Wealth PMS (50L+)
KSL and Industries Limited was due to return $90.05 million from FCCB (Foreign Currency Convertible Bonds) borrowings. (Read: The Upcoming FCCB Problem) The conversion price – at which bondholders could optionally convert to shares – was Rs. 213, while the stock is at a miserable Rs. 66.
So in the absence of conversion, the money has to be returned. The company has made losses in the last two quarters and lost over Rs. 92 cr. (Rs. 0.92 billion) in the last year. It has stated in a public press release that it can’t pay back the money and is renegotiating the case with its bondholders.
This is a default. If you need to restructure, you do it much before the maturity date, which was 19th May 2012. The fact that no restructuring was announced before maturity means a technical default, and now bondholders will either have to give the company more time, or simply go through the court process to get their money back.
The KSL default follows Sterling Biotech which didn’t pay $184 million. Hotel Leela had about $60 million due on April 25, which they didn’t pay on time (but had some of the money and could borrow the rest). On May 25th, they paid up.
I’ll track this more closely.