By Himanshu V. Kishnadwala, Chartered Accountant
New Page 1
10 Disclosure regarding Foreign Currency
Convertible Bonds (FCCBs) and premium on redemption of FCCB
Fame India Ltd. — (31-3-2008)
From Notes to Accounts :
On 21 April 2006, the Company, pursuant to a resolution of
the Board of Directors dated 28 January 2006 and by a resolution of the
shareholders dated 8 March 2006, issued
(i) 12000, Zero Coupon Series A Unsecured Foreign Currency
Convertible Bonds (‘Series A Bonds’) of the face value of US $ 1000; and
(ii) 8,000, 0.5% per annum Series B Unsecured Foreign
Currency Convertible Bonds (‘Series B Bonds’) of the face value of US $ 1000
aggregating to USD 20,000,000 (approximately Rs.901,000,000) due in 2011 (the
Series A Bonds and the Series B Bonds are collectively called the ‘Bonds’).
The Series Bonds bear interest at the rate of 0.5% per annum, which accrues
semi-annually in arrears on 31 December and 30 June of each year. Interest
will accrue on each interest payment date and on maturity, accrued interest
will be paid. The Bonds will mature on 22 April 2011.
The Bonds are convertible at any time on or after 21 May 2008
and prior to 12 April 2011 at the option of the Bond holders into newly issued,
ordinary equity share of par value of Rs.10 per share (‘Shares‘), at an initial
conversion price of
(i) Rs.90 per share for Series A Bonds; and
(ii) Rs.107 per share for Series B Bonds
(as defined in terms and conditions for the Bonds) at the
rate of exchange equal to the US Dollar to Rupees exchange rate as announced
by the Reserve Bank of India (the ‘RBI’) on the business day immediately prior
to the issue date. The conversion price is subject to adjustment in certain
circumstances.
Unless previously converted, redeemed or repurchased and
cancelled,
(i) the Series A Bonds will be redeemed on 22 April 2011 at
137.01% of their principal amount representing a gross yield to maturity of
6.5%; and
(ii) the Series B Bonds will be redeemed on 22 April 2011
at 140.69% of their principal amount representing a gross yield to maturity of
7.5%.
During the year 1,504,999 (31 March 2007; Nil) equity shares
of Rs.10 each were allotted against 3000 Series A Foreign Currency Convertible
Bonds (FCCB) of US $ 1,000 each at an exercise price of Rs.90 per share and
1,687,850 (31 March 2007; Nil) equity shares of Rs.10 each were allotted against
4000 Series B FCCB of US $ 1,000 each at an exercise price of Rs.107 per share,
thus aggregating to a total allotment of 3,192,849 equity shares of Rs.10 each
of the Company.
Exchange gain/loss arising on such conversion have been
adjusted against share premium reserve. Premium on FCCB amortised and adjusted
to the share premium account up to the date of conversion has been reversed.
The Bond issue expenses have been adjusted against share
premium as per the provision of Section 78 of the Act.
Utilisation up to 31 March 2008 of the proceeds from the FCCB
issue is as under :
| Purpose
|
Amount in Rs. |
(a) New cinema
complexes |
705,645,427 |
(b) Expansion/modernisation
of existing cinema complexes |
83,027,839 |
(c) FCCB issue
expense |
29,813,462 |
| Total |
818,486,728 |
(Currency :
Indian Rupees)
Balance
unutilised funds have been invested in : |
|
(a) Deposit
accounts |
10,180,107 |
(b) Current
accounts |
|
— in India
|
20,832,448 |
— outside
India |
8,151,235 |
The proceeds utilised have been converted at an average
exchange rate of Rs.42.58 per US $ and the balance outstanding as at 31 March
2008 is translated at the exchange rate of Rs.39.97 per US $, being the exchange
rate as at 31 March 2008.
Premium on redemption of Foreign Currency Convertible Bonds (FCCB)
* Premium payable on redemption of FCCB charged to the securities premium account has been provided pro rata for the year. In the event the conversion option is exercised by the holders of FCCB in future, the amount of premium charged to the securities premium account will be suitably adjusted in the respective years.
