Description

Material changes proposed to 3,828 rated, listed, secured, redeemable, non-convertible debentures aggregating up to INR 382.80 crores of Steel Exchange India Limited.

Summary

Steel Exchange India Limited has proposed material changes to its existing 3,828 rated, listed, secured, redeemable, non-convertible debentures aggregating up to INR 382.80 crores (INR 3,82,80,00,000). The changes primarily relate to the interpretation clauses in the debenture trust deed, particularly affecting the role and authority of the Debenture Trustee and introducing new definitions related to existing creditors and financial indebtedness.

Key Points

  • Total debentures affected: 3,828 NCDs worth INR 382.80 crores
  • Changes to Debenture Trustee’s decision-making authority from “Majority Resolution” to “Relevant Instructions”
  • Deletion of clause granting Debenture Trustee exclusive right to determine Material Adverse Effect
  • Introduction of Common Security Trustee Agreement provisions that will prevail in case of inconsistencies
  • New definitions added: Existing Creditor(s), Existing Finance Documents, Existing Financial Indebtedness, Existing Investors, and Existing Term Lender
  • Capri Global Capital Limited identified as Existing Term Lender (CIN: L65921MH1994PLC173469)

Regulatory Changes

Interpretation Clause Modifications

Original Provision: Debenture Trustee could make determinations regarding materiality or reasonableness based on instructions from Debenture Holders pursuant to a Majority Resolution.

Proposed Change: Debenture Trustee shall act on “Relevant Instructions” (specific definition not provided in excerpt).

Material Adverse Effect Determination

Deleted Provision: Debenture Trustee had sole and exclusive right to ascertain, assess, analyze and conclude on the existence of Material Adverse Effect, with decisions being conclusive and binding.

New Governance Framework

Inserted Provision: All actions, consents, and discretions by Debenture Trustee must be based on Relevant Instructions, subject to Common Security Trustee Agreement. In case of inconsistency between Transaction Documents and Common Security Trustee Agreement regarding inter-se relationship of Term Lenders and Debenture Trustee, acceleration and enforcement of Security, the Common Security Trustee Agreement shall prevail.

Compliance Requirements

  • Debenture Holders need to review the proposed material changes to understand impact on their rights
  • Existing debenture holders should assess how the change from “Majority Resolution” to “Relevant Instructions” affects their voting rights
  • Stakeholders must understand the new creditor hierarchy and security enforcement mechanism under the Common Security Trustee Agreement
  • Review of Schedule XIV (Existing Financial Indebtedness of Obligors) recommended to understand full extent of obligations

Important Dates

  • Circular Date: October 20, 2025
  • Transfer Date: Referenced but specific date not provided in excerpt
  • Effective dates for proposed changes: Not specified in the provided excerpt

Impact Assessment

High Impact on Debenture Holders:

  1. Governance Rights: Shift from Majority Resolution to Relevant Instructions may alter how debenture holders exercise control over trustee actions

  2. Security Enforcement: Introduction of Common Security Trustee Agreement creates a new layer of creditor coordination, potentially affecting enforcement speed and priority

  3. Decision-Making Authority: Removal of Debenture Trustee’s exclusive right to determine Material Adverse Effect transfers this critical assessment power, though to whom is unclear from excerpt

  4. Creditor Ranking: Addition of Existing Creditors definitions suggests potential pari-passu or subordination arrangements with other financial creditors including Capri Global Capital Limited

  5. Legal Complexity: Increased complexity in security documentation with Common Security Trustee Agreement taking precedence over original debenture trust deed terms

Market Impact: Material changes to substantial debt securities (INR 382.80 crores) may affect secondary market trading and investor confidence if changes are perceived as dilutive to existing holder rights.

Impact Justification

Material changes to debenture terms worth INR 382.80 crores affecting decision-making authority, security arrangements, and creditor relationships. High impact on existing debenture holders' rights and enforcement mechanisms.