Cloud of uncertainty is hanging over Prakash Industries Ltd (PIL) regarding the resource mobilization for redemption of upcoming foreign currency convertible bonds (FCCB) which are due in October 2014 and April 2015. PIL and its promoters are facing CBI action on account of allegations of graft and bribery. CBI has named PIL as one of the two companies in case of bribing the CMD of Syndicate Bank for extension of credit facilities to the company.
PIL had raised funds of USD 77.1 million through FCCBs in two tranches of USD 17.1 million and USD 60 million in FY10 and FY11 respectively. The same are due for redemption on October 13, 2014 and April 30, 2015 respectively. The company had planned to refinance the tranche I of FCCB of USD 17.1 million through an external commercial borrowing (ECB) from Syndicate Bank and also had planned to convert tranche II of FCCB into equity. With the action taken by the CBI against the company’s promoters, PIL may find it difficult to mobilize resources for redemption of these FCCBs on time.