Eros International, the New York Stock Exchange-listed arm of the film studio, will not be going through fund-raising exercise via the dollar bond route. Had the studio gone ahead with its plans, Eros would have been the first Indian entertainment company to do so.
Eros had met investors last week in Hong Kong, Singapore and London. Since, the company did not get the rates it was expecting on the dollar denominated bond, it postponed the bond issue.
In an emailed statement, Managing Director Jyoti Deshpande said, “The bond markets were a bit soft since the beginning of the week. Some of the other issuances, such as Noble Group, got priced at around nine per cent. The average cost of our total debt is around seven per cent, so to refinance it all at nine wasn’t making sense to us, especially when most of the debt is not even due and particularly because this was pitched as a pure refinance deal without adding to gross debt.”
The company had debt of $293.6 million at the end of 2016, of which $126.1 million was to be repaid within one year, according to a Reuters report.
“What we were attempting to do was an opportunistic benchmark bond to start building a track record with bond holders as we have done successfully with equity holders,” Deshpande added.
The company also tried reducing the size of the loan but it was not appealing to bond holders from a liquidity perspective, the statement said. “We have a strong balance sheet and we continue to enjoy healthy relationships with our group of existing lenders and have now got the benefit of positive feedback from bond investors as well, even though we decided to not go ahead with the deal at this instance. We will continue to communicate with potential investors and look for an alternative window when the timing is right in the future,” Deshpande added.
Eros was expected to raise between $200 and $230 million through sale of dollar bonds with five year maturity. The company has a 30 per cent market share by box office revenue in the Indian film production and distribution market. It releases close to 50 films a year in India and overseas.