Parag Milk Foods Revises FCCB Conversion Price with IFC

Parag Milk Foods Limited, in a recent stock exchange filing, provided an update about its previously announced subscription agreement with International Finance Corporation (IFC) for the issuance of foreign currency convertible bonds (FCCBs). Initially disclosed on May 9, 2021, the company had signed a subscription agreement dated May 8, 2021, with IFC for these FCCBs.

In the latest development, Parag Milk Foods has executed a First Amendment Agreement to the FCCB Subscription Agreement with IFC on July 9, 2024. This amendment primarily revises the conversion price of the FCCBs from the previously set ₹145 per equity share to ₹135 per equity share. This change follows commercial discussions between IFC and Parag Milk Foods and subsequent approval from the Reserve Bank of India.

The company stated that despite the revision in the conversion price, there is no change in the size of the agreement from what was initially outlined in the FCCB Subscription Agreement. The terms regarding the overall size of the FCCBs, special rights like the right to appoint directors, the first right to share subscription in case of issuance of shares, and the right to restrict any change in the capital structure remain intact as per the initial agreement disclosed on May 9, 2021.

The Amendment Agreement, executed on July 9, 2024, formalises this revision in the conversion price while retaining all other aspects of the original FCCB Subscription Agreement. The conversion price adjustment means that if IFC opts to convert the FCCBs into equity shares, the conversion will now occur at the revised rate of ₹135 per equity share instead of the earlier rate of ₹145 per equity share. This revision aims to align the conversion price more closely with current market conditions and strategic considerations of both parties.

This amendment underscores Parag Milk Foods’ commitment to maintaining a collaborative and flexible relationship with IFC, ensuring that the terms of the agreement remain favourable and reflective of the current financial landscape. The company believes this adjustment will better support its financial and operational strategies moving forward.

The key highlight of this update is the revision of the conversion price of the FCCBs from ₹145 to ₹135 per equity share, as agreed upon by Parag Milk Foods and IFC. All other terms and conditions of the original FCCB Subscription Agreement remain unchanged, maintaining the integrity and initial intentions of the agreement. This strategic adjustment is expected to benefit both parties, facilitating a smoother and more advantageous conversion process if IFC decides to convert the FCCBs into equity shares of Parag Milk Foods.

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