Welspun adjourns 4.5% convertible bondholder meeting to Oct. 21

By Marisa Wong

Madison, Wis., Oct. 15 - Welspun Corp. Ltd. announced that the meeting for holders of its 4.5% convertible bonds due 2014 has been adjourned to Oct. 21.

A previously announced bondholder meeting was held on Oct. 3 to approve a demerger, but a quorum was not present at the meeting. The meeting required two or more voters holding at least 66% of the total principal amount of bonds outstanding to be represented.

Welspun is proposing to transfer its infrastructure business, direct reduced iron business, oil and gas and EPC contracting business to Welspun Enterprises Ltd. Following the planned demerger, Welspun will retain its main business of manufacturing pipelines to transport oil, gas and water.

Welspun is also seeking consents from holders to modify the conversion right under the bonds and waive the requirement that the conversion price be adjusted due to the demerger.

The company is proposing that Welspun Enterprises issue one of its shares, each with a face value of Rs. 10, for every 20 shares, each with a face value of Rs. 5, that Welspun issues to holders who choose to convert their bonds after the demerger takes place.

If that proposal is not approved, holders can only convert their bonds into the shares of the demerged company at the unmodified conversion price. The initial conversion price is Rs. 300 per share, each with a face value of Rs. 5.

In order to pass the extraordinary resolution, at least three-quarters of the votes cast must be in favor of the proposals.

As of Monday, $79.5 million of the original $150 million principal amount of bonds remains outstanding.

Hongkong and Shanghai Banking Corp. Ltd. is the trustee for the bonds.

The issuer is based in Gujarat, India.

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