Ispat Industries, which failed to redeem its outstanding $122.2 million euro convertible bonds (ECBs) on the due date of March 31 this year, plans to roll over the bonds for a period of 15 years.
In a proposal circulated to its bondholders, the company has said the accumulated interest for the first seven years will be paid only at the end of the seventh year while regular interest payments will be made from the eighth year onwards.
When contacted, a top Ispat official said the company was bound by a confidentiality agreement with its bondholders, and therefore, would not comment on the issue.
The proposal is subject to ratification by the majority of the bondholders, but the date and venue of the meeting has not been decided yet.
The company had raised $125 million in 1996 through a 3 per cent ECB issue of which only $2.8 million has been converted into equity shares. Hence, the net outstanding debt is now $122.2 million.
The conversion price was Rs 67 per share, while the market price in the period immediately preceding the maturity period was well below par. The company had roped in ANZ Investment Bank as financial advisor to draft a restructured package for the bondholders.
According to investment bankers, at present Ispat does not have any choice but to seek a rollover of the bonds. The company
