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Essar resolves $250-m FRN issue
New Delhi, May 24: Essar Steel has finally settled its defaulted $250-million FRN issue, with about 70% of the note holders opting for redemption of the note at a huge discount of 76%, that is, $240 for every $1,000-note held.
New Delhi, May 24: Essar Steel has finally settled its defaulted $250-million FRN issue, with about 70% of the note holders opting for redemption of the note at a huge discount of 76%, that is, $240 for every $1,000-note held.
The repayment at the discounted rate means a huge saving of about Rs 625 crore to the company.
The actual saving to the company, however, will be about Rs 825 crore ($175 million) as the new settlement agreement also includes writing down of the accrued interests on the FRN.
According to banking sources, 15% of the issue holders opted for the new 15-year FRN note carrying a fixed interest rate of 0.25% per annum, while the remaining 15% opted for migrating to the Indian rupee note. The Indian rupee note will carry a fixed interest rate of 8% and will have a 15-year maturity period.
The settlement was reached at the FRN holders meeting in London on Tuesday at which the noteholders passed the resolution on the company-proposed new settlement options. JP Morgan Chase Bank is the trustee of Essar Steel’s FRN issue.
Bureau Report
The actual saving to the company, however, will be about Rs 825 crore ($175 million) as the new settlement agreement also includes writing down of the accrued interests on the FRN.
According to banking sources, 15% of the issue holders opted for the new 15-year FRN note carrying a fixed interest rate of 0.25% per annum, while the remaining 15% opted for migrating to the Indian rupee note. The Indian rupee note will carry a fixed interest rate of 8% and will have a 15-year maturity period.
The settlement was reached at the FRN holders meeting in London on Tuesday at which the noteholders passed the resolution on the company-proposed new settlement options. JP Morgan Chase Bank is the trustee of Essar Steel’s FRN issue.
Bureau Report