The due date for Vodafone Idea to pay Rs 146 crore of interest payment to the FT MF schemes was September 3.
The five schemes of Franklin Templeton Mutual Fund (FT MF), which are under wind-up, received Rs 146 crore of interest payment from telecom major Vodafone Idea that was due on September 3.
The investors of these schemes will receive these flows into their accounts in the next few days, as exposure to the telecom firm was side-pocketed at the beginning of the year.
The payments will be distributed to investors in proportion to the units held by them in the segregated portfolios of respective schemes.
A segregated portfolio -- or side-pocket as it is called in MF industry parlance -- is created to ensure that only investors exposed to the scheme on the day of credit event, can benefit from subsequent recovery of dues and also any improvement in credit profile.
In the case of Vodafone Idea, the side-pocket was created after rating agencies downgraded its debt instruments to below investment grade earlier in the year, following Supreme Court’s (SC) ruling on additional gross revenue or AGR dues.
The ruling created a liability of over Rs 44,000 crore for the telecom player.
The schemes that received these interest payments on Thursday include Franklin India Low Duration Fund, Franklin India Short Term Income, Franklin India Credit Risk Fund, Franklin India Dynamic Accrual Fund and Franklin India Income Opportunities Fund.
Recently, Vodafone Idea has also got some relief on the timeline for clearing its AGR dues, with SC giving ten years to telecom companies to make the payments.
In June, Vodafone Idea also paid dues on a different tranche of securities, which were held by FT MF and other fund houses.
In its recent update to investors on the schemes under wind-up, earlier in the day the fund house shared that it had received another Rs 1,498 crore from maturities, pre-payments and coupon payments in two weeks (between August 15, 2020 and August 31, 2020).
As of August 31, the total cash flows received stood at Rs 6,486 crore since the fund house announced the wind-up of six of its debt-oriented schemes in April.
Four of the six FT MF schemes have turned cash positive. These include Franklin India Ultra Short Bond Fund (cash holding of 31 per cent), Franklin India Dynamic Accrual Plan (14 per cent), Franklin India Low Duration Fund (five per cent) and Franklin India Credit Risk Fund (1 percent).
However, investors are yet to receive distribution of proceeds from these main portfolios, with the matter still being heard in courts and stay on the e-voting process by unit-holders.According to FT MF, active monetisation of assets held by the schemes and distribution of the proceeds will only be possible after successful completion of e-voting by unitholders.