PremiumFranklin Templeton has received ₹148.75 crore in interest from cash-strapped telecom operator Vodafone Idea Ltd, avoiding a default.
The asset management company (AMC) wrote down and then segregated its exposure to Vodafone Idea in January last year, following an adverse Supreme Court ruling on the telco’s liabilities.
Franklin Templeton is negotiating with Vodafone Idea over an interest rate reset clause in the Vodafone paper, a person aware of the matter said, requesting anonymity. The asset manager has an exposure of around ₹1,250 crore to the telecom firm.
The debt has a provision for ‘interest rate reset’ on 3 September. However, in a notice to unitholders on 16 August, Franklin Templeton dropped the reference to the put and call portion, citing implementation of a change effected by valuation agencies under the guidance of the Association of Mutual Funds in India’s valuation committee. It is unclear whether Franklin Templeton will be able to force Vodafone Idea to exercise the put option if the company cannot pay the interest rate.
Text messages to a Franklin Templeton spokesperson seeking clarity were not answered till the time of going to press.
The Vodafone Idea exposure is present in five of the six debt schemes that were wound up in April 2020. However, it was side-pocketed (placed in a separate portfolio) in January 2020 by Franklin Templeton, before the winding up of these schemes. Investors in side-pocketed units cannot enter and exit at will. They are repaid money as and when it is recovered from debt issuers.
This week, Franklin Templeton began payment of a fresh tranche of ₹2,918.5 crore to unitholders in the six schemes under winding-up. With this, the schemes will have cumulatively returned ₹23,998.84 crore, or 96.18% of the net asset value of the six schemes that were wound up on 23 April 2020. The winding-up of the schemes is being implemented by SBI Funds Management Pvt. Ltd under Supreme Court orders.
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