Prime Focus Limited has informed the Exchange about the issuance of a Corporate Guarantee in favor of certain banks for an amount of Rs. 250 Crores (Rupees Two Hundred and Fifty Crores Only) guaranteeing the repayment of a term loan to be availed by DNEG India Media Services Limited and Prime Focus Technologies Limited (subsidiaries of the Company).
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Prime Focus Limited has issued a Corporate Guarantee of Rs. 250 Crores in favor of certain banks on behalf of its two subsidiaries — DNEG India Media Services Limited and Prime Focus Technologies Limited. The guarantee is to secure the repayment of a term loan that these subsidiaries will be availing from the banks. The guarantee covers the full loan amount, meaning Prime Focus becomes contingently liable if its subsidiaries fail to repay.
This increases Prime Focus's contingent liability by Rs. 250 Crores, exposing parent company shareholders to the credit risk of its subsidiaries. However, it also enables the subsidiaries to access funding for business operations or growth, which could be positive if the loans are used productively.