Sep 28, 2011

PRIVATE PLACEMENT OF TAX FREE BONDS BY POWER FINANCE CORPORATION LTD. - SEPTEMBER 2011


PFC – BACKGROUND

·       A “Navratna” Government of India Undertaking with 73.72% shareholding held by Government of India.
·       Incorporated in the year 1986, received certificate of commencement of business in the year 1987 and commenced operations in the year 1988 as a part of GoI initiative to enhance funding of power projects in India.
·       Government of India undertaking operating as a leading power sector Public Financial Institution providing fund and non-fund based support for the development of the Indian Power Sector.
·       Declared as a ‘Public Financial Institution’ under section 4A of the Companies Act, 1956 in the year 1990.
·       Initially provided funding to power projects for SEBs and power departments and from 1997 began financing power projects in the private sector.
·       Spectrum of clients include state power utilities, central power sector utilities, power departments, private power sector utilities (including Independent Power Producers), joint sector power utilities, power equipment manufacturers and power utilities run by local municipalities.


PRIVATE PLACEMENT OF TAX FREE BONDS BY POWER FINANCE CORPORATION LTD.

 ISSUE TIME TABLE

Issue Opening Date
Thursday
September 29, 2011
Issue Closing Date
Friday
October 07, 2011
Pay-In Dates
Thursday to Friday
September 29, 2011 to October 07, 2011
Deemed Date of Allotment
Saturday
October 15, 2011

HIGHLIGHTS OF THE BONDS

Issuer
Power Finance Corporation Ltd.
Issue Size
Rs. 150 crore with an option to retain oversubscription 
 The amount of over subscription to be retained will be decided by PFC (As per CBDT notification, PFC can retain maximum subscription amount of upto Rs. 5,000 crore in the issue)
Instrument
Secured Redeemable Non-Convertible Non-Cumulative Tax-Free Bonds in the nature of Debentures (Series 79)
Tax Benefits
The income by way of interest will be entitled to exemption from income tax under section 10 (15) (iv) (h) of Income Tax Act, 1961
Instrument Form
In dematerialized form
Security
Charge over book debts of the company along with identified immovable property by an first/ second charge /pari passu charge, as may be agreed between the company and the Debenture Trustee, pursuant to the terms of the Debenture Trust Deed. The security will be registered in favor of trustees within the stipulated time
Credit Rating
‘AAA/Stable’ by CRISIL and ‘LAAA’ by ICRA
Face Value
Rs. 1,00,000/- per Bond
Issue Price
At par i.e. Rs. 1,00,000/- per Bond
Minimum Subscription
10 Bonds (Rs. 10.00 lac) and in multiples of 1 Bond (Rs. 1.00 lac) thereafter
Bond Series
79-A
79-B
Tenure
10 Years
15 Years
Put & Call Option
None
None
Maturity/ Redemption
At par on the expiry of 10th Year from the Deemed Date of Allotment
At par on the expiry of 15th Year from the Deemed Date of Allotment
Redemption Date
October 15, 2021
October 15, 2026
Coupon Rate
7.51% p.a.
7.75% p.a.
Interest Payment
Annually
Annually
Interest Payment Date
October 15, every year till maturity
October 15, every year till maturity
Pre-Tax Yield
May be subjective and may vary from case to case.
Listing
Proposed on the Wholesale Debt Market (WDM) Segment of National Stock Exchange of India Ltd. (NSE)
Trustee
PNB Investment Services Ltd.
Interest on Application Money
At the respective coupon rate (subject to deduction of tax at source, as applicable) from the date of realization of cheque(s)/ demand draft(s)/ RTGS in PFC account till the day prior to the Deemed Date of Allotment.
Who can apply
Companies, Body Corporate and Societies, PSUs, authorised to invest in Bonds, Registered Provident/ Superannuation/ Gratuity/ Pension Funds, Insurance Companies and Trusts authorised to invest in Bonds, Commercial Banks, Financial Institutions, Co-operative Banks, Regional Rural Banks etc, Non-Banking Finance Companies and Residuary Non-Banking Finance Companies, Mutual Funds, Resident Individuals, any other investor authorised to invest in these bonds, subject to confirmation from the Issuer

To Apply this Issue, Contact us at:

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