With a view to
further liberalising the ‘Scheme for issue of Foreign Currency
Convertible Bonds and Ordinary Shares (Through Depository Receipts
Mechanism), 1993’, the Government has decided to allow Indian
companies to prepay the existing Foreign Currency Convertible
Bonds (FCCB) subject to the following conditions:-
(a) This
provision of pre-payment (premature purchase) of existing
FCCBs will be available upto 30th September,
2003. The existing condition of minimum maturity period
for redemption of bonds (i.e. 5 years) is put on hold
till 30th September, 2003.
(b) The
initiation power/right of prepayment is vested with
the issuer of Bonds and not with the holder of bonds.
However, the actual pre-payment is subject to the consent
of the holder of the bond.
(c) The
pre-payment should be at most the face value of bonds
and not exceeding the face value (inclusive of all expenses
for such buyback).
(d) The
bonds purchased from the holders must be cancelled and
should not be re-issued or re-sold.
(e) The
funds resources for making such prepayment by the Company
shall not be by resorting to fresh external debt.
(f) This
prepayment scheme of FCCBs will not have any effect
on the bondholders of Indian Companies not opting this
window or on the non-participating bondholders of Indian
companies opting this window.
This scheme is
available under automatic route upto a limit of US $ 100 million
if the prepayment is made out of local resources and without
any limit if prepayment is out of EEFC (Exchange Earner Foreign
Currency) funds or inward remittances towards equity subject
to the fulfilling of the conditions mentioned in para 2 of this
guideline.
After completing
the transactions, the companies would be required to furnish
full particulars thereof including the number of bonds repurchased
(ie. prepaid), the rate of repurchase (including expenses, if
any), the number of residual bonds, source of funds to the Ministry
of Finance, Department of Economic Affairs and the Exchange
Control Department of the Reserve Bank of India, Central Office,
Mumbai within 30 days of completion of such transactions.
All transactions
under this scheme shall be performed on or before 30th
September, 2003.
