Sintex Industries step-down convertible bonds’ coupon capped at 5.918%

By Marisa Wong

Morgantown, W.Va., May 30 – Sintex Industries Ltd. issued a notice about the coupon for its recently amended $110 million 7% step-down guaranteed convertible bonds due 2022.

The bonds bear interest at 7% per year from May 25, 2016 up to May 25, 2018, stepping down to 3.5% per year from May 25, 2018 to May 25, 2022.

However, the company said it has been informed by the Reserve Bank of India that the interest rate on the bonds should not exceed the all-in cost ceiling of 5.918% per year.

The company said it believes the yield to maturity on the bonds is within the all-in cost ceiling as set by the Reserve Bank of India and that it is in discussions with the Reserve Bank of India to reach a solution.

In the meantime, the interest rate on the bonds is at the maximum of 5.918%.

According to a notice on Friday, the company paid $1,620,060 of interest for the period from Nov. 25, 2016 to May 24, representing an annualized rate of 5.918%.

If and when the Reserve Bank of India permits Sintex to pay interest at 7%, the balance of $724,940 for the period from Nov. 25, 2016 to May 24 will be paid to bondholders soon after.

The bonds were recently amended in connection with the spinoff of a new company called Sintex Plastics Technology Ltd. Sintex Plastics is now a guarantor under the bonds, and the bonds are now convertible into Sintex or Sintex Plastics shares.

The Gujarat, India, company is a provider of plastics and niche textile-related products.

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