State-owned Housing and Urban Development Corporation (HUDCO) plans to raise Rs 2,439 crore from an issue of tax-free bonds starting on Dec 2, 2013.
The Company is issuing tax free Bonds with a
face value of Rs. 1,000 each in the nature of secured, redeemable,
non-convertible debentures having benefits under Section 10(15)(iv)(h) of the
Income Tax Act, 1961, as amended (“BONDS”) aggregating to Rs 500 crore (“BASE
ISSUE SIZE”) with an option to retain oversubscription up to the Shelf
Limit of Rs 2439.1995 crore (“ISSUE”)
.
The Minimum Application Size for
the Issue is five (5) Bonds across all of the Series of Bonds and in multiples
of one (1) Bond thereafter. The Bonds issued through the Issue carry a coupon
rate of 8.51%, 8.58% and 8.76% payable annually for 10 years (Series 1A), 15
years (Series 2A) and 20 years (Series 3A), respectively for Qualified
Institutional buyers (QIBs), Corporates and High Networth Individuals (HNIs) applying
for bonds more than Rs. 10,00,000/- and 8.76% , 8.83% and 9.01% payable
annually for 10 years (Series 1B), 15 years (Series 2B) and 20 years
(Series 3B), respectively for Retail Individual Investors (“RIIs”)
applying for bonds upto Rs. 10,00,000/- The higher rate of interest,
applicable to RIIs, shall not be available in case the bonds are transferred by
RIIs to non retail investors (refer to Prospectus Tranche – II for details and
other terms and conditions).
The Issue will open for
subscription on December 2, 2013 and is scheduled to close on January 10, 2014.
The Bonds under the Issue are proposed to be listed on the BSE Limited.
The Bonds have been assigned a
rating of ‘CARE AA+’ by Credit Analysis & Research Limited while India
Ratings and Research Private Limited (formerly Fitch Ratings India Private
Limited) (‘IRRPL’) has assigned a rating of ‘IND AA+’ to the Bonds.
Instruments with this rating are considered to have high degree of safety
regarding timely servicing of financial obligations. This rating is not a
recommendation to buy, sell or hold securities and investors should take their
own decision. This rating is subject to revision or withdrawal at any time by
the assigning rating agency and should be evaluated independently of any other rating.
The Tranche – II Series 1A and
Tranche – II Series 1B Bonds, the Tranche – II Series 2A and Tranche – II
Series 2B Bonds and, Tranche – II Series 3A Bonds and Tranche – II Series 3B
Bonds can be redeemed after ten (10) years, fifteen (15) years and twenty (20)
years respectively from the deemed date of allotment. The Bonds will be issued
in both physical mode (other than to investors who are eligible QFIs as
detailed in the Prospectus Tranche – II and who do not have a demat account)
and dematerialized form (for all applicants). The Issue Price for all the
Series is Rs. 1,000 per Bond.
There are 4 categories of investors who can apply to the
issue – Category I, Category II, Category III and Category IV. Category I
includes Public Financial Institutions, scheduled commercial banks,
multilateral and bilateral development financial institutions, state industrial
development corporations, provident funds
and pension funds with minimum corpus of Rs 25 crore, Insurance companies
registered with IRDA, foreign institutional investors and sub-accounts (other
than a sub account which is a foreign corporate or foreign individual)
registered with SEBI including Sovereign Wealth Funds, Pension and Gratuity
Funds registered with SEBI as FIIs, National Investment Fund, Insurance funds
set up and managed by army, navy or air force of the Union of India or set up
and managed by the Department of Posts, Mutual Funds registered with SEBI and
Alternative Investment Funds. Category II will include Companies with the meaning
of Section 2(20) of Companies Act, 2013 Statutory bodies or corporations,
cooperative banks, Public/Private/Religious trusts, Limited liability
partnerships, eligible QFIs (not being individuals), Regional rural banks,
societies registered under the applicable law in India and authorized to invest
in bonds , Associations of persons, Partnership firms in the name of partners
and any other foreign/domestic legal entities/persons as may be permissible
under the CBDT Notification and authorised to invest in the Bonds in terms of
applicable laws. Category III will include Resident Indian individuals, Hindu
Undivided Families through the Karta, Eligible NRIs on a repatriation or non –
repatriation basis and Eligible QFIs (being individuals) applying for an amount
aggregating to above Rs 10 lakhs across all series of Bonds in this Issue.
Category IV will include Resident Indian Individuals, Hindu Undivided Families
through the Karta, Eligible NRIs on a repatriation or non – repatriation basis
and Eligible QFIs (being individuals) applying for an amount aggregating upto
and including Rs 10 lakhs across all series of Bonds in this Issue.
*The Ministry of Corporate
Affairs has, through its circular (General Circular No. 06/2013) dated March
14, 2013, clarified that companies investing in tax-free bonds wherein the
effective yield on the bonds exceeds the yield on the prevailing bank rate will
not be in violation of section 372A(3) of the Companies Act, 1956.
The funds raised through this
Issue will be utilised towards lending purposes, working capital requirements,
augmenting the resource base of HUDCO and other operational requirements.
However, in terms of the applicable regulations of the Reserve Bank of India,
subscription monies received from non-residents through the Issue shall not be
utilised for any re-lending purposes and shall be utilised for debt servicing
(including servicing of both principal and interest payments), statutory
payments, establishment and administrative expenses and other working capital
requirements of the Company, as detailed in the Prospectus Tranche – II.
The Lead Managers to the Issue
are Axis Capital Limited, Edelweiss Financial Services Limited, HDFC Bank
Limited, Karvy Investor Services Limited and RR Investors Capital Services
Private Limited. The Debenture Trustee for the Bondholders is SBICAP Trustee
Company Limited.
Disclaimer: “Housing and Urban
Development Corporation Limited ( “Company”), is proposing, a public
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 September 11, 2013 and a
Prospectus Tranche – II dated November 25, 2013 (the Shelf Prospectus and
Prospectus Tranche – II referred to as “Prospectus”) with the
Registrar of Companies, National Capital Territory of Delhi and Haryana, the
BSE Limited (“BSE”) which is the Designated Stock Exchange for the Issue
and the Securities and Exchange Board of India (“SEBI”). The Base Issue
Size under the Prospectus Tranche – II aggregates to Rs. 500 crore with an
option to retain over subscription up to the Residual Shelf Limit (i.e. Rs
2439.1995 crores). The Prospectus will be available on the website of BSE
at www.bseindia.com, SEBI at www.sebi.gov.in, the Company at www.hudco.org and the websites of the Lead
Managers at www.axiscap.in, www.edelweissfin.com, www.hdfcbank.com, www.karvy.com, www.rrfinance.com/www.rrfcl.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 10
of the Shelf Prospectus
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