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StanChart to sue Castex in UK for FCCB conversion

CNBC-TV18’s Sajeet Manghat reports that the Standard Chartered and some of its clients have asked their trustee, Citicorp International, to initiate legal proeedings against the company in a UK court.

After becoming the subject of a Sebi probe, Castex Technologies has a fresh problem.

CNBC-TV18’s Sajeet Manghat reports that the Standard Chartered and some of its clients have asked their trustee, Citicorp International, to initiate legal proeedings against the company in a UK court.

Standard Chartered is a holder of Castex’s foreign currency convertible bonds (FCCBs) and had previously asked the company to not go ahead and convert the debt into equity and has issued a notice in this regard, sources say.

But Castex decided to go ahead and issued nearly 3.94 crore shares against the FCCBs, after which the FCCB holders have decided to take legal action. Standard Chartered is learnt to believe the conversion was in violation of the redemption clause in the bond agreement.

The bank is learnt to have further asked Euroclear to freeze settlement of Castex bonds till court settles the matter.

Separately, Sebi is already investigating unusual price movement in the Castex stock this year.

Castex, an Amtek Group company, has the few option of continuing to pay interest on the FCCBs till this case is settled. This will ensure the company is not termed to have defaulted in case it loses. (A default would trigger accelerated payment).

Citicorp, Standard Chartered as well as Castex said they could not comment on the issue.

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