1. FCCB
 Foreign Currency convertible bond issued by a country
in a currency different than the its own currency
 Powerful instrument by which the country raises the
money in the form of a foreign currency
 Bond acts like both a debt and equity instrument
 Bondholder the option to convert the bond into a
company’s equity share
 Retain all features of a convertible bond

2. Current Crisis
 FCCBs became the favored instrument to raise capital for
Indian companies during the bull run from 2004 to 2007
 A large number of FCCB issued by Indian companies, due
to mature in next future
 Equity market not trading at the levels assumed when the
bonds were issued
 Majority of the bonds have not been converted to equity
 Companies struggling to meet their obligations on the debt

3. Emerge from the crisis
 Need to repay an estimated Rs. 33,000 crore (over
$7 billion)
 The Chinese banks may emerge as the big winners
 Reset the conversion price
 Approaching Investment Banks to be mediator
 Utilising the unused portion

4. Restructuring of FCCBs
 Restructuring is the reorganization of a company's
outstanding obligations
 Mostly done by reducing the burden of the debts on the
company by decreasing the rates paid and increasing the time
the company has to pay the obligation back
 Alternative available to Indian companies is to restructure the
terms of the FCCB in consultation with the bondholders
 May provide a temporary relief to the issuing companies

5. Reprising of FCCB Bonds
 Government has allowed Companies to reprice their
FCCB with QIPs
 Companies can use the last two weeks’ average price
as the minimum conversion price.
Conditions
 Approval of the board and its shareholders for
reprising
 Pricing should not breach FDI limits
 Fresh agreement with FCCB holders
 Approval by the RBI

6. Redemption Call
FCCB
CMP Amt Maturity Conversio Diff **
(Rs ) * ($ mln) date n (%)
price (Rs)
Panacea Biotec 210 36.8 Feb 11 358 -41.3
Amtek India 64 47.0 Oct 10 120 -46.5
Bharati Shipyard 272 46.9 Oct 10 498 -45.3
3i Info 68 20.2 Mar 11 115 -41.0
Bajaj Hind 129 99.6 Feb 11 465 -72.4
HCC 63 100.0 Mar 11 248 -74.7
Videocon Ind 263 42.3 Feb 11 449 -41.4
Amtek Auto 167 136.1 June 11 210 -20.6
Aban Offshore 813 66.1 Apr 11 2789 -70.8
India Cement 115 75.0 May 11 306 -62.5
Jubilant Life Sci. 313 142.1 May 11 413 -24.2
Glenmark Pharma 324 30.0 Jan 11 583 -44.4
Punj Lloyd 125 49.7 Apr 11 273 -54.0

7. Thank you!!!