MTNL defaults on interest payment for sovereign guarantee-backed Rs 6,100 crore bonds

New Delhi: Debt-ridden state-owned telecom operator MTNL has failed to make interest payments of sovereign guarantee-backed Rs 6,100 crore bonds as per stipulated norms, the company said in a regulatory filing.

PSU Watch is now on Whatsapp Channels. Click here to join

MTNL issued 5,000 government-guaranteed, unsecured, rated, listed, redeemable, non-convertible, and taxable bonds in the nature of debentures for an aggregate amount of Rs 6,109.6 crore in November 2022.

As per the payment mechanism of the Tri-Partite Agreement (TPA) signed among MTNL, the Department of Telecommunications (DoT) and Beacon Trusteeship, MTNL has to fund the semi-annual interest into an escrow account with an adequate amount 10 days before the due date.

"...it is informed that due to insufficient funds MTNL could not fund the ESCROW Account with the adequate amount," the state-owned firm said.

As per the terms of the bond agreement, the sovereign guarantee will be invoked by the debenture trustee in case of any default is made by MTNL in payment of principal and interest on the bonds and "the government of India is obliged to make the payment to MTNL for the same", the filing said.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)