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