A recent press report said that various banks have taken control of Trident Microfin by getting a majority stake in the firm, leaving promoter and chief executive Mr. Kishore Kumar Puli with a stake of only 4.2 per cent.
As per reports, banks such as ICICI Bank, HDFC Bank, Axis Bank, Indian Overseas Bank, Bank of India and Union Bank of India, have together acquired over 60 per cent stake in the microfinance company by converting a part of its debts into equity shares. Institutional investors Bellwether Microfinance Fund and India Financial Inclusion Fund hold its remaining stake
Reports said that Trident was the only micro-lender in which banks have acquired equity stake. It also said that the banks has converted around Rs 32-crore debts into equity shares, at a price of Rs 10 per share, in spite of the book value of the company being projected at around Rs 18.60 per share. The move is due to the part of Trident’s plan to restructure Rs. 125.5-crore bank debts.
Reports said that along with the conversion of 25 per cent of its existing debts into equity shares, the banks have also converted an additional 25 per cent of their loans to Trident into optionally-convertible preference shares.
According to reports, in case Trident fails to repay the remaining debts, or does not meet the terms mentioned in the debt-restructuring program the preference shares would also be converted into equity shares, giving the banks almost absolute control in the microfinance firm.
As per the terms the microfinance company has agreed to repay around Rs 62 crore of debts over the next eight years, including two years of moratorium at an interest of 12 per cent.