PFC's Rs 4,590 crore tax-free bond (7.86%) issue opens today

The tax-free bond issue of State-run lending agency Power Finance Corp (PFC) has today opened for subscription. "The tax-free bond issue to raise close to Rs 4,590 crore will open on December 14 and close on December 21," the company said in a statement.

The tranche one of the offering is likely to raise up to Rs 1,000 crore with an option to retain over-subscription up to shelf limit of Rs 4,590 crore, it said.

The bond issue would be for a period of 10-15 years offering an interest rate between 7.19 per cent and 7.86 per cent. The bonds are proposed to be listed on the BSE.

Public Issue of Tax Free Bonds in the nature of Secured, Redeemable, Non Convertible Debentures by PFC with tax benefits under Section 10 (15) (iv) (h) of Income Tax Act, 1961 Tranche 1 Bond issue to aggregate up to Rs. 1,000 crores  with an option to retain oversubscription upto Shelf Limit of Rs. 4,590 crore Coupon rate of 7.69% p.a. for 10 year Bonds and 7.86% p.a. for 15 year Bonds for retail investors (Individuals and HUFs investing upto and including Rs. 10.00 lacs across both the Bond Series). Coupon rate of 7.19% p.a. for 10 year Bonds and 7.36% p.a. for 15 year Bonds for all other category of investors Bonds are rated ”[ICRA] AAA” by ICRA and “CRISIL AAA/Stable” by CRISIL indicating highest degree of safety regarding timely servicing of financial obligations and carrying lowest credit risk. The Tranche 1 Bond Issue to open on December 14, 2012, and close on December 21, 2012 The Bonds are proposed to be listed on the BSE Limited (“BSE”) Option to hold the Bonds in either physical or demat form The Bonds shall be secured by way of charge on the book debts of PFC and/ or identified immovable property by a first/ pari passu charge, as may be agreed between PFC and the Debenture Trustee, pursuant to the terms of the Debenture Trust Deed.

The bonds would be raised through the non-convertible debenture (NCD) route.

An NCD is a type of loan-linked security issued by a company that cannot be converted into stock and usually carries a higher interest rate than a convertible debenture.

PFC plans to utilise the proceeds for lending purposes, debt servicing and working capital requirements and not for any specified project, the release said.

ICICI Securities Ltd, AK Capital Services Ltd, Enam Securities, Kotak Mahindra Capital Company Ltd and SBI Capital Markets Ltd are acting as lead managers to the issue.State-run lending agency Power Finance Corp (PFC) today said its tax-free bond issue, through which it plans to raise up to Rs 4,590 crore, will open for subscription tomorrow.

"The tax-free bond issue to raise close to Rs 4,590 crore will open on December 14 and close on December 21," the company said in a statement here.

The tranche one of the offering is likely to raise up to Rs 1,000 crore with an option to retain over-subscription up to shelf limit of Rs 4,590 crore, it said.

The bond issue would be for a period of 10-15 years offering an interest rate between 7.19 per cent and 7.86 per cent. The bonds are proposed to be listed on the BSE.

The bonds would be raised through the non-convertible debenture (NCD) route.

An NCD is a type of loan-linked security issued by a company that cannot be converted into stock and usually carries a higher interest rate than a convertible debenture.

PFC plans to utilise the proceeds for lending purposes, debt servicing and working capital requirements and not for any specified project, the release said.

ICICI Securities Ltd, AK Capital Services Ltd, Enam Securities, Kotak Mahindra Capital Company Ltd and SBI Capital Markets Ltd are acting as lead managers to the issue.

Disclaimer:

Power Finance Corporation Limited (“Company”), is proposing, a public issue (“Issue”) of tax free bonds of face value of ` 1,000 each in the nature of secured, redeemable, nonconvertible debentures, having benefits under section 10(15)(iv)(h) of the Income Tax Act, 1961, as amended and has filed a Shelf Prospectus dated December 8, 2012 and a Prospectus Tranche – I (the Shelf Prospectus and the Prospectus Tranche - I referred to as “Prospectus”) dated December 8, 2012 with the Registrar of Companies, National Capital Territory of Delhi & Haryana, BSE Limited (“BSE”) which is the Designated Stock Exchange for the Issue and the Securities and Exchange Board of India (“SEBI”). The issue size under the Prospectus Tranche – I aggregates to ` 1,000 crore with an option to retain over subscription up to the Shelf Limit (i.e. ` 4,590.00 crores). The Shelf Prospectus and Prospectus Tranche – I (”Prospectus”) are available on the website of  the BSE at www.bseindia.com, SEBI at www.sebi.gov.in, the Company at www.pfcindia.com and the websites of the Lead Managers at www.icicisecurities.com,  www.akcapindia.com, www.enam.com, www.kotak.com and www.sbicaps.com. Investors are advised to take any decision to invest in the Bonds pursuant to their examination of the Company and on the basis of disclosures made in the Prospectus. Please see the section entitled “Risk Factors” beginning on page 11 of the Shelf Prospectus for risks in this regard.