SSNL told to fix record date before AGM

The Bombay stock Exchange has asked the Sardar Sarovar Nigam (SSNL) to fix the record date for holders of its deep discount bonds before holding a general meeting on May 28 to discuss the vexed special resolution on early redemption of the bonds.

The meeting has been convened to get bond holder approval to insert a call option in the deep discount bonds issued by the company.

As the original prospectus did not contain a provision for early redemption, the company will require either proxy approval by 75 per cent of bondholders in writing or a quorum of five bond holders present and voting in the special resolution meeting.

Bondholders are of the view that most of the bonds being in the physical form, it will require 10-15 days to ascertain the number of the bondholders.

Moreover there should be a gap of 21 days between convening the meeting and the record date. Thereafter, the proxy ballot forms to be issued to all the bond holders whose names appear on the record date. In all likelihood, they feel the meeting would get postponed in order to fulfil all these formalities.

The bond holders have been irked by the fact that the company has asked for early redemption even after promising above 18 per cent returns for a period of 20 years. Being deep discount bonds, the payments will be made at the end of the 20 years only.

Bondholders are of the view that investors will lose above Rs 20,000 crore at today's rate and this being the difference in the redemption price of Rs 25,000 and expected market price of Rs 50,000 considering the yield to maturity at 9.25 per cent for 9 years.

The company had called a special resolution of the bond holders on May 28 in Gandhinagar and has decided to insert a call option if the proposal is approved by a quorum of five bondholders.

This option will arise if it fails to get the written approval by ballot from 75 per cent for the bond holders.