Date:06/01/2006 URL: http://www.thehindubusinessline.com/2006/01/06/stories/2006010601760200.htm

Back L&T launches $100-m yen-denominated FCCB

Our Bureau

L&T has considered both the interest of Japanese investors as well as the cost advantage of issuing the bonds denominated in yen.

Mumbai , Jan. 5

LARSEN & Toubro has launched a $100-million foreign currency convertible bonds (FCCB) issue denominated in Japanese yen.

This, according to the company, will be the first Japanese yen-denominated FCCB issue to be launched in India.

There is a considerable interest advantage to a yen-denominated issue although the yen's volatility needs to be managed expertly, said Mr R. Shankar Raman, Executive Vice-President, L&T.

He said L&T has considered both the interest of Japanese investors as well as the cost advantage of issuing the bonds denominated in yen. The interest with respect to the US dollar is 4.8 per cent to 5 per cent, while with the yen it is 0.5-1 per cent, said Mr Raman.

The differential works out to between 3.5-4 percentage points.

The differential has existed for some time now for Indian companies to use it to advantage, but it is a question of confidence, said Mr Raman.

L&T has revenues in multiple currencies and has now sufficient preparedness to manage the volatility of the yen, he said.

The zero-coupon convertible bonds have a maturity of five years and are convertible into global depository shares at a premium of 35 per cent over the BSE closing share price of Rs 1,850.70 on January 4, said a news release from the company.

The bonds will be listed in an international exchange.

Proceeds from the issue would finance the capital expenditure plans of the company and further international acquisitions.