Simbhaoli Sugars today announced buyback of foreign currency convertible bonds (FCCBs) worth $25.11 million to improve the company's debt-equity ratio and indicated to buy back $7.89 million FCCBs in future.
The leading sugar company had issued FCCBs worth $33 million in 2006, which were to mature on March 2011, to partially finance its expansion plans. The maturity value was estimated at $45.2 million, unless converted to equity or redeemed before.
The FCCBs have been bought back through external commercial borrowings (ECBs), Simbhaoli Sugars said in a statement.
The buyback and cancellation of bonds will strengthen the financial position of the company and improve its debt-equity ratio, said Sanjay Tapriya, Chief Financial Officer, Simbhaoli Sugars.
"This is part of the financial strengthening exercise which the company has initiated," he added.
Tapriya also said the company would continue to buy back the remaining 24 per cent of FCCBs worth $7.89 million, subject to the cost of purchasing remaining attractive and within agreed parameters.
These bonds are optionally convertible into equity at Rs 153 per share or redeemable with 37 per cent premium on the principal amount on maturity.
The company said that the option to convert these FCCBs into shares has become remote because of erosion in market valuations of corporate securities, particularly of sugar companies.
These bonds have also been traded at discounts to their par values, the statement said.
The share of Simbhaoli Sugars has declined to Rs 39.70 from Rs 164 on March 31, 2006. The current paid-up equity capital of the company is Rs 214 million.
