Essel Infra defaults on repayment to Franklin Templeton

Mumbai: In a note to investors, Franklin Templeton has said, Essel Infra has defaulted on its repayment on May 22, 2020. However there is no fall in the NAV of the four schemes of the fund house that that hold the security.

“At maturity the issuer was unable to meet the maturity obligation. These NCDs are currently valued at 15% of value, after taking a 85% hair cut. The NCDs are backed by a pledge of listed shares of Zee Entertainment, Dish TV, Unlisted shares of EIL, personal guarantee of Subhash Chandra and corporate guarantee. There is no impact on NAV of the schemes in comparision to that of May 21,” .

"No comments," said a spokesperson for Essel Infra.


“There is no impact on NAV as value of shares held as collateral is greater than current valuation of bond. The fund house has not yet sold the collateral,” said a person familiar with the development.

After the haircut these bonds are cumulatively valued at Rs 92 crore.

Four of its fixed income schemes, Franklin India Dynamic Accrual Fund , Franklin India Credit Risk, Franklin India short Term Income Plan and Franklin India Low Duration Fund are invested in 0% essel Infra Series 1 and 0% Essel Infra Series 2, which matured on May 22, 2020. All the four mentioned funds are part of the six schemes that will be wound up by Franklin Templeton. As the process of winding up the schemes is on, investors cannot transact in any of these schemes. Franklin Templeton has appointed a legal counsel and is actively considering all necessary actions to maximize recovery value in Essel infra Bonds.