Power Finance Corporation Limited
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IN THE NATURE OF FORM 2A - MEMORANDUM CONTAINING SALIENT FEATURES OF THE PROSPECTUS THIS ABRIDGED PROSPECTUS CONSISTS OF 48 PAGES, PLEASE ENSURE THAT YOU GET ALL PAGES Please ensure that you read the Tranche I Prospectus and Shelf Prospectus dated September 22, 2015 (together “Prospectus”) and the general instructions contained in this Memorandum before applying in the Issue. Unless otherwise specifi ed, all capitalised terms used in this form shall have the meaning ascribed to such terms in the Prospectus. The investors are advised to retain a copy of Prospectus/Abridged Prospectus for their future reference. POWER FINANCE CORPORATION LIMITED (A Government of India undertaking) Our Company was incorporated as Power Finance Corporation Limited on July 16, 1986 as a public limited company under the Companies Act, 1956, as amended and was granted a certifi cate of incorporation by the Registrar of Companies, National Capital Territory of New Delhi & Haryanaand was granted a certifi cate of commencement of business on December 31, 1987. For further details, see the section titled “History and Certain Corporate Matters” on page 146 of the Shelf Prospectus. The Corporate Identifi cation Number of our Company is L65910DL1986GOI024862. Registered and Corporate Offi ce: ‘Urjanidhi’, 1 Barakhamba Lane, Connaught Place, New Delhi 110001, India. Telephone:+91 11 2345 6000; Facsimile: +91 11 2341 2545 Company Secretary and Compliance Offi cer: Mr. Manohar Balwani; Telephone: +91 11 2345 6000; Facsimile: +91 11 2341 2545 E-mail: [email protected];Website: www.pfcindia.com and www.pfc.gov.in PUBLIC ISSUE BY POWER FINANCE CORPORATION LIMITED (“COMPANY” OR THE “ISSUER”) OF TAX FREE BONDS OF FACE VALUE OF ` 1,000 EACH IN THE NATURE OF SECURED, REDEEMABLE, NON-CONVERTIBLE DEBENTURES, HAVING BENEFITS UNDER SECTION 10(15)(iv)(h) OF THE INCOME TAX ACT, 1961, AS AMENDED (“BONDS”)FOR AN AMOUNT OF `100 CRORES (“BASE ISSUE SIZE”) WITH AN OPTION TO RETAIN OVERSUBSCRIPTION UP TO `600 CRORES AGGREGATING TO `700 CRORES* (“TRANCHE I ISSUE”) AND IS BEING OFFERED BY WAY OF The Tranche I PROSPECTUS CONTAINING, INTER ALIA, THE TERMS AND CONDITIONS OF The Tranche I ISSUE (THE “TRANCHE I PROSPECTUS”), WHICH SHOULD BE READ TOGETHER WITH THE SHELF PROSPECTUS DATED SEPTEMBER 22, 2015 FILED WITH THE REGISTRAR OF COMPANIES, NATIONAL CAPITAL TERRITORY OF DELHI AND HARYANA (“ROC”), DESIGNATED STOCK EXCHANGE AND THE SECURITIES AND EXCHANGE BOARD OF INDIA (“SEBI”). THE SHELF PROSPECTUS TOGETHER WITH THE TRANCHE – I PROSPECTUS CONSTITUTES THE “PROSPECTUS”. The Tranche I Issue is made under the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, as amended (“SEBI Debt Regulations”) and pursuant to notifi cation No.59/2015 dated July 6, 2015 issued by the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, by virtue of powers conferred upon it by item (h) of sub-clause (iv) of clause (15) of section 10 of the Income Tax Act, 1961, as amended. *In terms of the CBDT Notifi cation, our Company has been authorised to issue tax free secured redeemable non-convertible bonds for an amount of` 1,000 crore during the fi scal 2016 of which at least 70.00% of aggregate amount of bonds is to be raised through public issue. Accordingly, our Company plans to raise `700 crore (“Issue Size”) through this issue. PROMOTER The President of India, acting through and represented by Ministry of Power, Government of India. For further details refer to the chapter “Our Promoters” on page 198 of the Shelf Prospectus. GENERAL RISKS Investors are advised to read the section titled “Risk Factors” on page 16 of the Shelf Prospectus carefully before taking an investment decision in relation to the Tranche I Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Tranche I Issue, including the risks involved. The Tranche I Prospectus has not been and will not be approved by any regulatory authority in India, including the Securities and Exchange Board of India (“SEBI”), the Reserve Bank of India (“RBI”), the Ministry of Power, any registrar of companies or any stock exchange in India. INTEREST/COUPON RATE, FREQUENCY OF INTEREST PAYMENT, REDEMPTION DATE, REDEMPTION AMOUNT & ELIGIBLE INVESTORS For details relating to Coupon Rate, Coupon Payment Frequency, Redemption Date of the Bonds, see section titled “Terms of the Issue” on page 63 of the Tranche I Prospectus. For details relating to eligible investors please see “The Issue Structure” on page 55 of the Tranche I Prospectus. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confi rms that the Tranche I Prospectus does contain all information with regard to the Issuer and the Tranche I Issue, which is material in the context of the Issue; that the information contained in the Tranche I Prospectus is true and correct in all material respects and is not misleading in any material respect; that the opinions and intentions expressed herein are honestly held and that there are no other material facts, the omission of which makes the Tranche I Prospectus as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect. CREDIT RATING CRISIL Limited (“CRISIL”) has assigned a rating of ‘CRISIL AAA/ Stable’ to the long term borrowing programme of our Company for an amount upto ` 50,000 crores for Fiscal 2016, by its letter dated April 7, 2015 and revalidated the said rating vide its letter dated June 23, 2015,August 27, 2015 and September 16, 2015. ICRA Limited (“ICRA”) has assigned a rating of ‘[ICRA] AAA’ to the long term borrowing programme of our Company (including bonds and long term bank borrowing) for an amount upto ` 60,000 crores for Fiscal 2016, by its letter dated April 8, 2015 and revalidated the said rating vide its letter dated June 22, 2015,August 31, 2015 and September 17, 2015. Credit Analysis & Research Ltd. (“CARE”) has assigned its rating of 'CARE AAA' to overall borrowing programme of our Company for an amount upto ` 60,000 crores (including short term borrowing aggregating to ` 10,000 crores as a sub-limit) for Fiscal 2016 by its letter dated April 7, 2015 and revalidated the said rating vide its letter dated June 22, 2015, August 31, 2015 and September 17, 2015. Instruments with these ratings are considered to have the highest degree of safety regarding timely servicing of fi nancial obligations and such instruments carry lowest credit risk. For details, see the section titled “Terms and Conditions in Connection with the Bonds” on page 58 of the Tranche I Prospectus. For the rationale for these ratings, see Annexure B of the Shelf Prospectus. This rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. This rating is subject to revision or withdrawal at any time by the assigning rating agencies and should be evaluated independently of any other ratings. PUBLIC COMMENTS The Draft Shelf Prospectus dated September 10, 2015 was fi led with BSE, the Designated Stock Exchange, pursuant to the provisions of the SEBI Debt Regulations and was open for public comments for a period of seven Working Days (i.e., until 5 p.m. on September 18, 2015) from the date of fi ling of the Draft Shelf Prospectus with the Designated Stock Exchange. LISTING The Bonds are proposed to be listed on the BSE, which is also the Designated Stock Exchange for the Tranche I Issue. BSE has given its in-principle listing approval vide its letter dated September 18, 2015 ISSUE PROGRAMME** ISSUE OPENS ON: OCTOBER 5, 2015 ISSUE CLOSES ON: OCTOBER 9, 2015 *Milestone Trusteeship Services Private Limited has by its letter dated August 20, 2015 given its consent for its appointment as Debenture Trustee to the Issue and for its name to be included in the Shelf Prospectus, the Tranche Prospectus (es) and also in all the subsequent periodical communications sent to the holders of the Bonds. **The Tranche I Issue shall remain open for subscription on Working Days from 10 a.m. to 5 p.m. during the period indicated above, except that the Tranche I Issue may close on such earlier date or extended date as may be decided by the Board or a duly constituted committee thereof. In the event of an early closure or extension of the Tranche I Issue, our Company shall ensure that notice of the same is provided to the prospective investors through an advertisement in a reputed daily national newspaper on or before such earlier or extended date of Issue closure. On the Tranche I Issue Closing Date Application Forms will be accepted only between 10 a.m. and 3 p.m. (Indian Standard Time) and uploaded until 5 p.m. or such extended time as may be permitted by the BSE. A copy of the Shelf Prospectus and Tranche I Prospectus has been fi led with the Registrar of Companies, National Capital Territory of Delhi & Haryana in terms of section 26 and 31 of Companies Act, 2013, along with the endorsed/certifi ed copies of all requisite documents. For further details please refer to the section titled “Material Contracts and Documents for Inspection” on page 118 of the Tranche I Prospectus. PLEASE READ THE RISK FACTORS CAREFULLY. SEE SECTION TITLED “RISK FACTORS” ON PAGE NO. 39 OF THE ABRIDGED PROSPECTUS AND PAGE NO. 16 OF THE SHELF PROSPECTUS POWER FINANCE CORPORATION LIMITED 3 IN THE NATURE OF FORM 2A - MEMORANDUM CONTAINING SALIENT FEATURES OF THE PROSPECTUS LEAD MANAGERS TO THE ISSUE CONSORTIUM In addition to Lead Managers, consortium include the following: A.K.