Accept offer, will withdraw plea: Bondholders to RBI

Investors of YES Bank additional tier-1 (AT-1) bonds have written to the Reserve Bank of India (RBI) through Axis Trustee Services asking it to accept an offer where they can recover at least 20 per cent of investments, saying they will withdraw their petition in Bombay High Court (HC) if this is done.

In a letter sent by Axis Trustee to RBI, the former said that bondholders propose a minimum of 1.7 billion shares to be allotted to them, in proportion of their current exposures.

As a result, the imputed value would work out to ~10 per share, which would approximately amount to ~1,700 crore. This will lead to “salvaging near-about 20 per cent of the principal outstanding”, the note said.

Further, the bondholders have requested that the lockin features, if any, should be restricted to 36 months, in line with the proposed new equity issuance of the issuing bank.

Axis Trustee also said that if the above terms were acceptable, the majority bondholders of AT-1 bonds, on whose behalf it is intervening, would not pursue any further legal recourse and would withdraw the current petition.

Axis Trustee had filed a petition in the Bombay HC seeking relief from the RBI’S proposal for a full writedown of YES Bank’s AT-1 Bonds. Arguments are yet to begin, with the matter still in the pre-admission stage.

Meanwhile, L&T and L&T Officers and Supervisory Staff Provident Fund also moved HC on Wednesday, seeking relief.

Overall, more than ~8,000 crore of investments are exposed to YES Bank’s AT-1 bonds. The information memorandum of these bonds had outlined the risk of writedown or equity conversion in case the bank is deemed nonviable or approaching nonviability.

AT-1 bonds are also called perpetual bonds as there is no fixed maturity date and bondholders can exit when the issuing bank exercises its call option, which is typically five years from date of issue.