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June 2009

Buyback/Prepayment of Foreign Currency Convertible Bonds (FCCBs)

By Pinky Shah, Sonalee Godbole, Gaurang Gandhi, Tarun Ghia, Nimesh Dedhia, Vijay Kewalramani
Chartered Accountants
Reading Time 1 mins
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Part C : RBI/FEMA


Given below are the highlights of certain RBI Circulars

  1. A. P. (DIR Series) Circular No. 65, dated April 28, 2009

Buyback/Prepayment of Foreign Currency Convertible Bonds
(FCCBs)

Presently, buyback of FCCB up to US $ 50 million is
permitted, subject to certain terms and conditions, under the approval route.

This Circular has raised this limit for buyback out of
internal accruals from US $ 50 million to US $ 100 million, subject to the
following :

i) Minimum discount of 25 per cent of book value for
redemption value up to USD 50 million;

ii) Minimum discount of 35 per cent of book value for the
redemption value over USD 50 million and up to USD 75 million; and

iii) Minimum discount of 50 per cent of book value for
the redemption value of USD 75 million and up to USD 100 million.

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