L&T Infrastructure tranche 2 bonds issue to open on Jan 10

L&T Infrastructure Finance Company is issuing tranche 2 bonds through a public issue of long term infrastructure bonds with a face value of Rs 1,000 each in the nature of secured, redeemable, non-convertible debentures having benefits under Section 80CCF of the Income Tax Act, 1961, for an aggregate amount up to Rs 300 crore with an option to retain an oversubscription of up to Rs 1,100 crore for allotment of additional tranche 2 bonds (including the amount received against the allotment of tranche 1 bonds).

The minimum subscription will be five (5) tranche 2 bonds and in multiples of one (1) tranche 2 bond thereafter. The tranche 2 bond issue will open on January 10, 2012, and close on February 11, 2012, or earlier, as may be decided by the board of the company. The tranche 2 bonds will carry an interest rate of 8.70% per annum payable annually or compounded annually. The tranche 2 bonds are proposed to be listed on BSE. 

The tranche 2 bonds will be issued on the terms set out in the shelf Prospectus dated November 18, 2011 as amended and supplemented by the Corrigendum to the Shelf Prospectus dated January 6, 2012 and the Prospectus � Tranche 2 dated January 3, 2012.

The Tranche 2 Bonds have been rated �CARE AA+� by CARE and �[ICRA] AA+� by ICRA considered to offer high safety for timely servicing of financial obligations.

The tranche 2 bonds will carry a minimum Lock-in period of five (5) years from the date of allotment and can be redeemed after ten (10) years from the deemed date of allotment. The tranche 2 bond will be issued in dematerialised form and trading can also happen in demat form post the Lock-in period of 5 years from the deemed date of allotment. Redemption /maturity date shall be 10 years from the deemed date of allotment. In these Tranche 2 Bonds, the Bondholder has 3 exit options. The first one is at end of 5 years, the second at the end of 7 years and the third after 10 years which is at the time of redemption. The Tranche 2 Bonds can be held either in the physical or in demats form.

In the case of series 1 of the tranche 2 bonds, the interest rate is 8.70% payable annually and in the case of Series 2, the interest rate is 8.70% compounded annually payable at the end of maturity or buyback. The maturity is 10 years from the deemed date of allotment.

80CCF Benefit: The bonds have been classified as "long term infrastructure bonds� as per the terms of Section 80CCF of the Income Tax Act. As notified under Section 80CCF, an amount, not exceeding Rs 20,000 per annum, paid or deposited as subscription to long term infrastructure bonds during the previous year relevant to the assessment year beginning April 01, 2012, shall be deducted in computing the taxable income of a resident individual or Hindu Undivided Family. In the event that any applicant applies for Tranche 2 Bonds exceeding Rs. 20,000 per annum, the aforesaid tax benefit shall be available to such applicant only to the extent of Rs 20,000 per annum.

The funds raised through this Issue will be utilized towards �infrastructure lending� as defined by the RBI in the regulations issued by it from time to time, after meeting the expenditures of, and related to, the Issue. The Tranche 2 Bonds will be in the nature of debt and will be eligible for capital allocation and accordingly will be utilized in accordance with statutory and regulatory requirements including requirements of the RBI and the Ministry of Finance.

The Lead Managers to the Tranche 2 Bond Issue are ICICI Securities Limited, JM Financial Consultants Private Limited and Karvy Investor Services Limited. The Co-Lead Managers to the Issue are SMC Capitals Limited, Bajaj Capital Limited, RR Investors Capital Services Private Limited and Integrated Enterprises (India) Limited. The Debenture Trustee to the Issue is Bank of Maharashtra.