Dec 27, 2011

PFC - Tax-Free Secured Redeemable Non-Convertible Bonds in the nature of Debentures - December 2011

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Power Finance Corporation Ltd. is a “Navratna” Government of India undertaking with 73.72% shareholding held by Government of India. 
PFC TAX FREE SECURED REDEEMABLE NON CONVERTIBLE DEBENTURES
Highest Credit Rating of AAA Stable by CRISIL and ICRA AAA by ICRA.  

Issue Opening Date- 30th December , 2011 ------ Issue Closing Date – 16th January, 2012*

Terms of Issue

Issuer Power Finance Corporation Ltd.
Issue
Public Issue by Power Finance Corporation Limited (“Company” or “Issuer”) of tax free bonds of face value of Rs1,000 each, in the nature of secured, redeemable, non-convertible debentures, having benefits under section 10(15)(iv)(h) of the Income Tax Act, 1961, as amended aggregating Rs 1,000 Crores with an option to retain an oversubscription upto the Shelf Limit (i.e. Rs  4033.13 Crores) (“Issue”).
Nature of Instrument Non-Convertible Redeemable Tax-Free Bonds in the nature of Debentures
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
There will be no deduction of tax at source from the interest, which accrues to the bondholders in these bonds irrespective of the amount of the interest or the status of the investors
Credit Rating
“CRISIL AAA/Stable” by CRISIL to the long term borrowing programme of ` 38,500 Crores and CRISIL A1+ (pronounced as CRISIL A One Plus) to the short term borrowing programme of Rs 5000 Crores (a total of ` 43,500 crores).
“ICRA AAA” by ICRA to the Long Term Borrowing Programme of ` 43,500 crores during the financial year 2011-12.
Face Value Rs. 1,000/- per Bond
Issue Price At par i.e. Rs. 1,000/- per Bond
Minimum Application Size Rs. 10,000 (10 Bonds) and in Multiples of Rs 5,000 (5 Bonds)
Options Option-IOption-II
Tenure 10 Years / 15 Years
Put & Call Option None / None
Redemption Date At the end of 10 years from the Deemed Date of AllotmentAt the end of 15 years from the Deemed Date of Allotment
Frequency of Interest Payment
Annual / Annual
Coupon Rate (%) p.a.
8.20% / 8.30%
Redemption Amount (Rs/Bond) Repayment of the Face Value plus any interest that may have accrued at the Redemption Date
Listing Proposed to be listed on BSE
Trustee GDA Trustee & Consultancy Ltd.
Security
The Bonds issued by the Company will be secured by creating a charge on the book debts of the company and/or identified immovable property by a first /pari passu charge, as may be agreed between the Company and the Debenture Trustee, pursuant to the terms of the Debenture Trust Deed.
Nature of Indebtedness and
Ranking
The claims of the Bondholders shall rank pari passu with other secured creditors having a charge over the book debts of the company and/or identified immovable property as may be agreed between the Company and the Debenture Trustee, pursuant to the terms of the Debenture Trust Deed and such claims shall be superior to the claims of any unsecured creditors


 HIGHLIGHTS OF TAX BENEFITS:
  • In exercise of the powers conferred by item (h) of sub-clause (iv) of clause (15) of Section10 of the Income Tax Act, 1961 (43 of 1961) the Central Government authorizes PFC to issue during the FY 2011-12, Tax Free, Secured, Redeemable, Non-convertible Bonds.\
  • The income by way of interest on these Bonds is fully exempt from Income Tax and shall not form part of Total Income as per provisions under section 10 (15) (iv) (h) of I.T. Act,1961.
  • There will be no deduction of tax at source from the interest, which accrues to the bondholders in these bonds irrespective of the amount of the interest or the status of the investors.
  • Wealth Tax is not levied on investment in Bond under section 2(ea) of the Wealth-tax Act, 1957.
 Features:
  • The interest on the bonds would be tax exempt
  • Tenor shall be 10 & 15 years.
  • Issue Size: Rs. 4033.12 Cr
  • PAN is mandatory
  • No Lock In period
  • NRIs can also invest 
  • Available in demat as well as physical mode

Kindly indicate your interest on by Calling us at 0-9818269396, or email at info@safeinvestindia.com. We shall send you the Soft / Hard copy of application forms.

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