FCCB woes come to haunt Cranes Software

Business

oi-Monika Nihalani

By Monika Nihalani

Published: Friday, July 15, 2011, 12:18 [IST]

Bangalore based Cranes Software is again in line of default. It has been in a default making mode for settling its FCCBs payments since December 2009. After Wockhardt and Karur KCP Packagings, this is the another Indian company which is caught up in tussle with offshore investors holding foreign currency convertible bonds (FCCBs) issued by the company, as reported by Economic Times (ET).

Cranes Software is an organization which deals with engineering and scientific software tools and products. It also offers training in Embedded Systems & RTOs.

The company was co-founded by Asif Khader and Mukarram Jan in 1991. The Company started as a distributor of anti-virus software in Bangalore and later moved on to become the sole authorised distributor of MATLAB in South Asia in 1993.

The company raised Euro 42 million 2.5% Convertible Bonds Due 2011 (FCCBs) in 2006 to fund its organic as well as inorganic expansion plans. The Bank of New York Mellon (BNY Mellon) serves as trustee, principal agent, paying agent and registrar for the FCCBs. And the company was due to pay Accreted Principal Amount together with accrued and unpaid interest since December 2009.

The company has accumulated debt of Rs 863 crore as of March 2010. It's revenue slipped from Rs 358 crore for year ended March 2009 to Rs 28 crore in March 2011.

BNY Mellon initiated winding-up proceedings against Cranes Software last month on behalf of select institutional investors, reports ET.

Company is directly in touch with bondholders and it is negotiating the terms of the restructuring programme. In restructuring programme, companies replace FCCBs with new securities with lower interest coupon, new conversion terms and longer maturity.

FCCBs journey in India
FCCBs have been going through tough journey since 2008 when markets tumbled. From 2004 to 2007, FCCBs became a craze for raising money to make expansion and buyouts by companies. Once the international markets crashed in 2008, FCCBs lost its ground because of the instrument"s drawback. The companies failed to meet redemption demands in such a tight credit crunch.

Companies got stuck in FCCB tornado in past were Ashok Leyland, Suzlon Energy, Ranbaxy, wockhardt and Karur KCP Packagings.

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