Rajasthan Seb To Privately Place Rs 300 Cr Bonds

Rajasthan State Electricity Board yesterday opened a Rs 300 crore private placement of bonds, with an option to retain oversubscription up to Rs 100 crore.

The issue offers two options to the applicants _ taxable bonds with a coupon rate of 12.25 per cent per annum, and infrastructure bonds under section 10 (23) G of the Income Tax Act, 1961, with a coupon rate of 11.3 per cent per annum. The applicant may subscribe for any one of the two options or for both the options.

The tenure of the bonds are 7 years from the date of allotment with put and call option at the end of the fifth year. The bonds are backed by a structured payment mechanism with an unconditional and irrevocable guarantee of the Rajasthan government for the payment of principal and interest. The guarantee will be valid till the bonds are redeemed.

 

The bonds will be issued in the nature of promissory notes and are being issued as a structured obligation of RSEB and government of Rajasthan. These bonds are state government guaranteed, non-convertible, non-cumulative and redeemable. The bonds are transferable by endorsement and delivery. The bonds have received "Care A (SO)" rating indicating adequate safety for payment of principal and interest.

Allottees of the infrastructure bonds will have the following additional comfort _ in case the government withdraws the benefit of tax exemption under section 10 (23) G of the Income Tax Act, 1961, at any point of time during the currency of the bond, the coupon rate of such bond will be re-set to make it equal to the coupon rate of taxable bond. In other words, the infrastructure bond would stand converted, from the date of withdrawal of the benefit, into taxable bond.

Also, in case any investor considers it advantageous to shift the investment from the infrastructure bond to the taxable bond at any time point of time after expiry of one year from the date of allotment, such shifting may be allowed from the date of receipt of request. The option for conversion from infrastructure bond to taxable bond, may, however, not be reversed during the remaining tenure of the bond.