Franklin Templeton Asset Management will file a fresh petition in the Karnataka High Court in a couple of weeks to lift the Gujarat High Court stay on e-voting to wind up six debt schemes.
Last week, the Supreme Court had dismissed a similar plea filed by the fund house and transferred all cases filed by investors to the Karnataka High Court with a deadline of three months.
Sanjay Sapre, President, Franklin Templeton, said two of the six schemes – Franklin India Ultra Short Bond and Dynamic Accrual funds – have repaid their bank borrowings and are cash-positive. These schemes can start repayments to investors, subject to a successful unitholder vote.
Franklin India Ultra Short Bond Fund will have in excess of 7 per cent of its AUM available to distribute to unitholders by June-end, and it will be in excess of 6 per cent in Franklin India Dynamic Accrual Fund, he said in a note.
In Credit Risk Fund, the borrowing level has come down to 11.25 per cent from 22.27 per cent as on April 24, he said.
The six schemes have received ₹1,964 crore through maturities, pre-payments, and coupon payments between April 24 and June 15.
Default woes
The fund house said two bonds issued by the Essel Infraprojects defaulted on the principal payment on May 22, and a recovery action has been initiated. Four of the six debt schemes have investments in these bonds, and the equity share collateral is adequate to cover this value as of June 22, said Sapre.
Similarly, Reliance Big Entertainment defaulted on interest payment obligation on June 14. The put option (exercise date of June 15) was not exercised as the security is already rated ‘D’, and the next put option falls on September 14.
“We are exploring options for invocation of pledged shares and the corporate guarantee to recover the money. Five of the six impacted schemes have investments in these bonds, which have been marked down already. The share collateral is adequate to cover this value as of June 22,” he said.
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