Update Regarding Debt Securities of Steel Exchange India Limited

Description

Proposed material changes 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 to INR 382,80,00,000 (INR 382.80 crores). The changes primarily relate to the interpretation and governance framework of the debenture deed, including modifications to the Debenture Trustee’s authority, introduction of new creditor definitions, and establishment of a Common Security Trustee Agreement framework.

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 Debenture Trustee’s exclusive right to determine Material Adverse Effect
• Introduction of Common Security Trustee Agreement to govern inter-creditor relationships
• Addition of new defined terms: Existing Creditor(s), Existing Finance Documents, Existing Financial Indebtedness, Existing Investors, and Existing Term Lender
• Capri Global Capital Limited identified as Existing Term Lender
• Common Security Trustee Agreement provisions will prevail in case of inconsistency with other transaction documents

Regulatory Changes

Changes to Interpretation Clauses

1. Materiality Determinations:

• Original: Debenture Trustee acting on instructions of Debenture Holders pursuant to Majority Resolution
• Proposed: Debenture Trustee acting on “Relevant Instructions”

2. Material Adverse Effect Assessment:

• Original: Debenture Trustee had sole and exclusive right to assess Material Adverse Effect based on Majority/Super Majority Resolution
• Proposed: This provision has been deleted entirely

3. New Governance Framework:

• Debenture Trustee can only take action, give consent, or exercise discretion based on “Relevant Instructions” (unless modified by Common Security Trustee Agreement)
• Common Security Trustee Agreement will prevail over Transaction Documents in case of inconsistency regarding inter-creditor relationships, acceleration, and enforcement of security

New Definitions Added

Existing Creditor(s): Financial creditors to any obligor as per Schedule XIV, including transferees, assignees, or successors

Existing Finance Documents: Financing and security documents executed by obligors in favor of existing creditors

Existing Financial Indebtedness: Cumulative outstanding amounts payable under existing finance documents as per Schedule XIV

Existing Investors: Debenture holders prior to the Transfer Date

Existing Term Lender: Capri Global Capital Limited (CIN: L65921MH1994PLC173469)

Compliance Requirements

• Debenture holders should review the proposed material changes to understand impact on their rights
• Debenture Trustee must now act based on “Relevant Instructions” rather than Majority Resolution for materiality determinations
• All parties must acknowledge supremacy of Common Security Trustee Agreement provisions
• Obligors must ensure compliance with both existing finance documents and revised debenture terms
• Inter-creditor arrangements must be aligned with Common Security Trustee Agreement framework

Important Dates

• Circular Date: October 20, 2025
• Specific effective dates and approval timelines not mentioned in the provided content

Impact Assessment

Impact on Debenture Holders:

• High Impact: Significant changes to governance and decision-making framework
• Loss of Debenture Trustee’s exclusive authority on Material Adverse Effect determinations
• Introduction of “Relevant Instructions” mechanism changes voting and instruction requirements
• Rights may be subordinated to Common Security Trustee Agreement provisions

Impact on Security and Enforcement:

• Introduction of inter-creditor framework suggests multiple layers of creditors
• Common Security Trustee Agreement will govern priority and enforcement rights
• Existing creditors (including Capri Global Capital Limited) now formally recognized in debenture structure

Operational Impact:

• Changes indicate potential restructuring or refinancing arrangement
• Multiple creditor layers may affect recovery prospects and timeline
• Debenture holders’ ability to independently direct trustee actions may be constrained

Credit Risk Considerations:

• Presence of existing financial indebtedness suggests leveraged capital structure
• Inter-creditor agreement may affect seniority and recovery rates
• Material changes to governance could impact debenture holder protections

Impact Justification

Material changes to INR 382.80 crore debenture structure affecting decision-making authority, debenture trustee powers, and creditor hierarchy with introduction of existing creditors and common security trustee agreement