Tulip IT Services announces the Launch of US$125 million Zero Coupon Convertible Bonds

Tulip IT Services Ltd has announced that on June 26, 2007 the launch of US$125 million direct, unsubordinated, unconditional and (subject to the conditions of the negative pledge) unsecured zero coupon convertible bonds due 2012 (the "Bonds"). In addition, the Lead Manager has an option to increase the issue size by an additional US$25 million. Given a favourable credit and interest rate environment, the Company has decided to issue the Bonds to meet capital expenditure in connection with the strengthening and expansion of infrastructure for the Issuer's telecommunications network, make overseas acquisitions and any other uses as may be permitted in accordance with applicable law. The Bonds will be convertible into equity shares of the Company, quoted in Indian Rupees.

The five year zero coupon Bonds will have a yield to maturity of 7.00% to 7.75% per annum (calculated on a semi-annual basis), and the conversion price is expected to be set at a premium of between 30% to 35% to the volume weighted average price of the equity shares of the Company on the National Stock Exchange of India Ltd (the "NSE") between opening of trade and pricing. The Bonds will be issued at par and, if not previously converted, redeemed or purchase and cancelled, redeemed at 141.871% to 147.185% of par on maturity. The Company has the right to redeem all outstanding Bonds, subject to applicable laws, at their accreted principal amount on or after August 26, 2010 if the parity of the Bonds (in US$ terms) trades for a specified period of time at 130% or more of the accreted principal amount. The Bonds are expected to price today and closing is expected on or about July 26, 2007.

Application will be made for the Bonds to be listed on the Singapore Exchange Securities Trading Ltd and for in-principle approval for the shares to be issued upon conversion of the Bonds to be listed on the NSE and The Bombay Stock Exchange.

On May 21, 2007 the Issuer sought the approval of its shareholders for the issue of the Bonds and for issue of the Shares to be issued upon conversion of the Bonds by postal ballot. The result of the postal ballot is expected to be published on July 05, 2007 and the closing of the issue of the Bonds will be conditional upon such approval being duly given. The principal shareholders of the Issuer, who hold approximately 68.95 per cent. of the issued share capital of the Issuer, have confirmed to Barclays Capital that they have voted in favour of the resolutions proposed in such postal ballot.

It is expected that the audited financial statements of the Issuer for the fiscal year ended March 31, 2007 will be published by the Issuer on or about July 05, 2007. Further, it may be noted that the unaudited consolidated gross debt position of the Company as of March 31, 2007 was Rs 1,417m (comprising of Rs 857m of working capital loans and Rs 560m of term loan facilities).

Barclays Capital is the Sole Bookrunner and Sole Lead Manager for the offering. State Bank of India and Bank of India are the Financial Advisors for the offering.

Source : Equity Bulls

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