Strides surges as co fully redeems FCCBs

Strides Arcolab shares were up 5 percent at Rs 758, after the company said it has redeemed foreign currency convertible bonds, i.e. the money being raised by the issuing company is in the form of a foreign currency worth $80 million.

The company will not have any outstanding FCCBs after this redemption, the company said in a press release to the exchanges.

In 2007, Strides had raised $100 million via FCCBs, of which $20 million worth bonds were bought back in 2009. The total payout of the company for the redemption including the premium was $116 million, the company said.

[caption id="attachment_358689" align="alignleft" width="380" caption="FCCBs are bonds issued to raise debt in foreign currency"][/caption]

FCCBs are bonds issued to raise debt in foreign currency. The holders have an option to convert them into equity. With the equity market volatile, issuers of FCCBs are hardpressed to buy them back, as no holder is willing to convert into equity.

More from Investing

Rating agency Standard & Poor's said in a report that as many as half of the 48 Indian companies with FCCBs maturing in the rest of 2012 may default due to the slump in the local stock markets and the rupee.

"With India's stock market still in a slump, investors don't want to convert the $5 billion in FCCBs that will mature in the rest of 2012 into stock that's worth 20 percent- 90 percent less than the conversion price. Instead, they want their money," S&P said.