Zee Media Corporation Limited has informed the Exchange about issue of Foreign Currency Convertible Bonds (FCCBs)
ZEEMEDIA · price
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Zee Media Corporation's board has approved raising funds through Foreign Currency Convertible Bonds (FCCBs) of up to USD 46,590,000 (approximately Rs. 399.78 crore at USD/INR rate of 85.81) on a private placement basis. The bonds carry a low 5% annual coupon, are unsecured and unlisted, and have a 10-year maturity. They will be issued to two foreign funds — UNICO Global Opportunities Fund Limited and Sun India Opportunities Investing Fund — in five series with proceeds drawn in tranches. The conversion price has been fixed at Rs. 13.50 per equity share (including Rs. 12.50 premium), which is above the regulatory floor price of Rs. 13.04 per share. If fully converted, the FCCBs would translate into about 29.61 crore equity shares of Re. 1 each, representing significant potential dilution for existing shareholders.
This is a fundraise of roughly Rs. 400 crore from foreign investors at a modest 5% coupon, which is cheap compared to domestic debt. However, if the bonds are fully converted, existing shareholders face meaningful equity dilution of around 29.6 crore new shares. The conversion price of Rs. 13.50 being only slightly above the floor price of Rs. 13.04 is mildly dilutive at issuance. Investors should watch the share price reaction, as FCCB conversions typically pressure stock prices when the conversion price is near or below market levels.