As a crisis continues at Amtek Auto, markets regulator Sebi has begun a probe into alleged share price manipulation at its listed subsidiary Castex Technologies through forced conversion of foreign bonds.
Auto component maker Amtek is grappling with financial issues and its shares have also taken a beating in recent weeks, while exposure to its bonds have created ripple effects in the mutual funds and other market segments as well.
Sources said Sebi is seriously looking into the matter following allegations by some bondholders that efforts are being made to manipulate the share price of Castex Technologies by forcibly asking investors to convert their bonds.
In the wake of these complaints, the watchdog has started a probe into the issue, they added.
Both Amtek Auto and Castex Technologies could not be immediately contacted for their comments.
On July 31, Castex Technologies informed the BSE that its board of directors has decided to mandatorily convert all the outstanding bonds of USD 80.80 million out of FCCB (Foreign Currency Convertible Bond) issue of USD 130 million.
The conversion date for conversion of bond into equity shares, would be September 10, 2015, it had said.
“The board has also decided to mandatorily convert all the outstanding bonds of USD 56.60 million of FCCB issue out of USD 70 million. The conversion date for conversion of bond into equity shares, would be September 25, 2015,” the filing made in July had said.
Besides, the company’s board had approved issuance of mandatory conversion notices, in terms of the bond documents.
Shares of Castex Technologies dropped nearly five per cent to close at Rs 42.45 on the BSE today.
Amtek Auto, in August, had said that “there is temporary cash flow mismatch in the company.”
Last month, JP Morgan Mutual Fund restricted redemptions from two of its debt schemes u2014- Short Term Income Fund and India Treasury Fund.
The move came in the wake of a decline in NAVs (net assets value) of the schemes due to fund house’s exposure to Amtek Auto’s debt papers. These schemes have a collective exposure of about Rs 200 crore in Amtek Auto.
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