Franklin Templeton’s shut schemes receive Rs 1,964 cr (Ld)

Franklin Templeton India’s President Sanjay Sapre has told investors that its six debt schemes which are being wound up have received Rs 1,964.21 crore from routine proceeds including maturities, pre-payments and coupon payments since the announcement of the closure of the funds in April.

“From April 24, 2020 to June 15, 2020, the schemes have received Rs 1,964.21 crore from maturities, pre-payments, and coupon payments,” Sapre said in a letter addressed to the investors.

The schemes which are being wound up have assets of over Rs 25,000 crore.

He further said that two of the six schemes — Franklin India Ultra Short Bond Fund and Franklin India Dynamic Accrual Fund — have repaid their bank borrowings and are cash positive.

“These schemes can start repayments to investors subject to a successful Unitholder Vote. We anticipate that Franklin India Ultra Short Bond Fund will have in excess of 7 per cent of its AUM available to distribute to Unitholders by the end of June 2020, and Franklin India Dynamic Accrual Fund could have in excess of 6 per cent of AUM by the same time,” he said.

In one more scheme, Franklin India Credit Risk Fund, the borrowing level has come down to 11.25 per cent from its original level of 22.27 per cent on April 24, 2020.

The letter noted that the cash has been generated only through pre-payments, scheduled maturities and coupon payments and the mutual fund house would be able to accelerate monetisation post a successful Unitholder vote.

He noted that the E-Voting and Unitholder’s meet for the six schemes under winding up cannot be conducted till the stay order issued by the Gujarat High Court is vacated.

“In the meanwhile, we have been working to analyze the portfolio of each scheme and develop a monetization strategy for each of the securities in the portfolio. The schemes continue to receive maturities, pre-payments and coupon payments. However, an efficient monetization of assets and distribution of investment proceeds will be possible only after obtaining consent of the unitholders,” said the letter.

“I understand that the delay due to various legal cases have added to your disappointment and inconvenience. We are doing our best to have these resolved at the earliest so that the schemes can start to efficiently monetize assets and return money to you,” it added.