Sterling Biotech Ltd. (SLT), a gelatin maker based in Mumbai, didn’t pay $184 million of convertible notes that matured yesterday, the biggest missed payment by an Indian company on debt that can be swapped for shares.
The company is negotiating a new repayment schedule with investors, according to a person familiar with the matter, who confirmed the non-payment and asked not to be identified because the details are private. Sterling has hired Avista Advisory Associates Pvt. and Houlihan Lokey, a U.S. investment bank, to advise on the restructuring, the person said.
Sterling is the third Indian company to miss a convertible bond repayment this year, after Hotel Leela Venture Ltd. and Murli Industries Ltd., according to data compiled by Bloomberg. Companies in the South Asian nation need to repay a record $5.3 billion of convertible securities in 2012, the data show.
Sterling Chairman Nitin Sandesara wasn’t available to comment when called at his office in Mumbai today. Convertible bonds can be exchanged for a set number of shares in the company that issued the notes at a pre-determined conversion price.
Sterling dropped as much as 1.2 percent to 7.95 rupees in Mumbai today, the lowest in almost a decade. The stock has plunged 62 percent this year and is trading at 95 percent below the rate at which investors can convert their debt into shares.
The zero-coupon bonds, sold in 2007 at par, were due to be redeemed at $136.7 per $100 of face value, according to data compiled by Bloomberg. The notes traded at $44 on May 15, according to Cantor Fitzgerald LP prices. Sterling also has 3 billion rupees ($55 million) of 12 percent bonds due in August 2015, the data show.
The company reported a second straight quarter of losses for the three months ended March 31 on May 15.
To contact the reporter on this story: Anurag Joshi in Mumbai at firstname.lastname@example.org