BOLLYWOOD firm Eros is under investigation in London and India, and its bonds are trading at an artificially low rate on the London Stock Exchange, according to reports.
Hundreds of bondholders have formed an action group against the London-based Lulla family-owned company to fight for their rights, reported This is Money.
Recently, major lender Bank of India filed a claim against company in the London Circuit Commercial Court.
Last month, India's ministry of corporate affairs ordered an inspection of the accounts of Eros International Media, after the market regulator in June accused the media group of financial misreporting and fund diversion.
The probe was initiated after the ministry was "satisfied" that an inspection was required to check allegations of fund siphoning.
Eros International is a distributor and producer of movies and owns OTT streaming platform, Eros Now.
In 2014, Eros initiated a £50 million seven-year bond offering with an attractive 6.5 per cent annual interest, and many investors eagerly subscribed at a rate of £1 per bond.
However, the company encountered financial challenges during the pandemic and is still in the process of recovering. As part of its efforts, Eros restructured its bonds, extending their maturity date to 2026.
In March, Eros offered to buy back up to half its bonds at 60 per cent of their value, to raise the interest to 9 per cent and to delay the date when the funds need repaying.
After numerous bondholders agreed to the deal, the Lullas changed their mind and offered to purchase only £2m of bonds, potentially delaying payment until next March. This announcement caused Eros bond prices to plummet to 16p, This is Money report added.
Adding to the pressure, Indian regulators started investigating the company's accounts and have banned several directors from holding office.
Moreover, investors are now confronted with the possibility of even larger losses as Eros bonds are being traded with the assumption that the company may not make interest payments on time, particularly the ones due in October.
There are reports that investors may lose hundreds of pounds in unpaid interest if they choose to sell their bonds.
Bondholders who had consented to the restructuring earlier this year have been deprived of the option, as their bonds have been frozen since April.
Presently, Eros has tentatively agreed to allow investors to reclaim their bonds, but the new process, is yet to be fully resolved.
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