Moneycontrol » News » Business » Business News

FCCB cannot be repriced further: Uttam Galva

Published on Fri, Oct 03, 2008 at 10:55 | Source : CNBC-TV18

Updated at Fri, Oct 03, 2008 at 21:48

4959 Investors following Uttam Galva. Share this News with them.

Share on Tumblr

Ankit Miglani, Director , Uttam Galva Steels Ltd

Excerpts from Bazaar on CNBC-TV18 Watch the full show »

RELATED NEWS

Uttam Galva Steel touches 52-week low

ALSO READ

Uttam Galva

BSE | NSE 25/05/12

Are Mutual Funds betting on Uttam Galva?

Ankit Miglani , Director of Uttam Galva Steels Ltd , which had re-priced the Foreign Currency Convertible Bond (FCCB) from Rs 65 earlier to Rs 45 last year, said it cannot be re-priced further. The FCCB had an inbuilt reset clause and the company had already reset it last year, he added. The bulk of FCCB has been converted or redeemed already, Miglani said.

Ambareesh Baliga from Karvy Stock Broking said "the concern is basically going to be FCCBs and it is not only for Uttam Galva, but it is going also to be across number of midcaps where the prices have fallen below the conversion price." He said there is a fear now that these companies may have to refund their FCCBs as and when they mature. However, Ambareesh believes, at that point there is a big question whether these companies will be able to refund those FCCBs.

Here is a verbatim transcript of the exclusive interview with on CNBC-TV18. Also watch the accompanying video.

Q: Is it true that you will have to re-price your FCCBs now, are you actively considering it?

A: Our FCCBs had a reset clause in built and they have already been reset last year - so where the original price of the FCCB was Rs 65 for the conversion, it is currently at Rs 45.

Q: But your stock is at Rs 24 - do you think that will hold out or you would need to re-price downwards further?

A: I don't think the FCCBs can be re-priced further at all as per the norms of the FCCB. So I don't think that's an option at all but I don't think that is an issue of consideration at this point - the bulk of the FCCB is either been converted or has been redeemed already. Out of the USD 44 million of FCCB that was originally issued, only about USD 17.5 million worth of FCCB remains in the books being paid.

Q: For the part that was redeemed, can you just tell us the path that was just converted, can you tell us what price it was converted at and what is the plan now for this remaining USD 17.5 million?

A: It was converted at a rate of Rs 45; it was converted earlier this year - before the year-ending; the remaining will either be converted if the stock price is favourable or it will be redeemed in 2010. Either way I don't see much of an option. The remaining amount equates to a dilution of about 12%-13% if it is converted and even if it is redeemed, our cash-flows are sufficiently healthy to handle the redemption in 2010. So there is no issue as such.