Repayments May Get Delayed If Unitholders Don't Authorise Trustees: FTMF

Franklin Templeton Mutual Fund (FTMF) on Thursday reached out to unitholders of its six wound-up schemes informing them that trustees would need their authorisation to monetise the holdings of respective schemes, without which the repayment process could get delayed.

"If Trustees do not receive authorization to proceed with the disposal of assets of the scheme, this may delay the process of monetising such assets and distribution of proceeds,” the fund house said and added that the payment schedule/payouts can only be finalised and implemented after the successful completion of the voting process.

The fund house re-iterated that the reason for winding-up the six schemes was to preserve the value for unitholders and return money at the earliest.

Further, the fund house pointed out that under regulation 41 of the Securities and Exchange Board of India’s (mutual fund) regulations, the wind-up process would require vote from unitholders to authorise the trustees.

FTMF also clarified that voting in ‘negative’ will not reverse the wind-up decision taken for the schemes or lead to restart of redemptions or fresh subscriptions in these schemes.

The fund house said that borrowing levels in some of the wound-up funds saw a marked reduction as these started to see cash flows via coupons, scheduled maturities and prepayments.

On concerns over the maturity profiles of these schemes, FTMF said that the schemes will explore all possibilities to monetise the underlying assets in the portfolio before their respective maturities. While the aim will be to return the monies well in advance of the maturity dates, the fund house will not resort to distress sales.

The investors will shortly receive an email from the fund house with a ‘notice’ related to the ‘voting process’.

The voting activity will be conducted separately for each of the schemes. This means that if an investor has exposure to one or more of the wind-up schemes, he or she will have to vote separately for each scheme they are invested in.

FTMF re-iterated that it remains committed to India and understands the only way to re-build its brand reputation and regain investors’ trust, is to pay the maximum possible value to all unitholders in the shortest possible time in these ‘unprecedented’ times.