Konkan Rly To Float Rs 150cr Debenture Issue

The increase in cost will be partly funded by the issue of bonds, and Rs 200 crore is to be raised from external commercial borrowings. The corporation has already completed its roadshows for the $30-million external commercial borrowing, and the disbursal is expected by December 1996. The corporation is planning an issue of 15-lakh, 10.5 per cent tax-free secured redeemable bonds in the nature of debentures of Rs 1,000 crore each for cash at a discount of 5 per cent, aggregating Rs 150 crore.

It has already filed the draft prospectus for the issue with Securities and Exchange Board of India (Sebi).

According to the draft prospectus, each bond of Rs 1,000 face value will be available for Rs 950 on application. Applications will be accepted for a minimum of five bonds and in multiples of one bond.

The bonds will carry tax-free interest at the rate of 10.5 per cent a year payable half-yearly on July 1 and January 1 of each year on principal amounts outstanding from time to time.

Crisil has assigned a A- rating to the bonds issue. The draft document states that the rating indicates adequate safety for timely payment of interest and principal. The company has applied to the railway board for a letter of comfort for enhancement of credit rating.

SBI Capital Markets will be the lead manager to the issue. The corporation proposes to list the bonds on the National, New Delhi, Mumbai, Bangalore, Cochin and Mangalore stock exchanges. There will be a buy-back option at the expiry of five years from the date of allotment up to a limit of Rs 5,000 per bondholder.

Konkan Railway is also planning to retain oversubscription received up to a maximum of Rs 200 crore.

In July 1988, Southern Railway had estimated the project cost at Rs 861.9 crore. The cost was re-estimated at Rs 1,043 crore by taking the capital costs at 1989-90 price levels.

According to the draft document, the cost of the project was revised again as per the 1991-92 price levels, and the distance was reduced from 837.12 km to 760 km owing to realignment. Because of time and cost overruns, the project estimate was later revised to Rs 2,784 crore.