M&G under fire over Eros Media World Bollywood bond drama

One of the UK’s largest investment firms is under fire for failing to protect thousands of depositors who bought bonds issued by struggling Bollywood film group Eros Media World.

M&G, which manages more than £340 billion in investor money, has been accused of failing to defend the interests of bondholders.

A formal complaint has now been lodged against the company with Britain’s main financial regulator, the Financial Conduct Authority.

Eros, controlled by India’s ultra-wealthy Lulla family, launched a £50 million bond in London in 2014. It was due to be repaid in April, but in March the Lullas said they wanted to buy back up to half of their bonds at a price of 60 pence in the pound and defer repayment of the rest until 2026.

The deal came with a series of controversial terms, but investors jumped in anyway, frustrated by Eros missing interest payments for months and alarmed by the fact that the group hasn’t filed any bills since 2021.

M&G was appointed trustee within weeks of the new bond proposal. It was tasked with coordinating and representing bondholders when necessary.

Since then, Eros has failed investors repeatedly. Three months after it first proposed a restructuring of its bond offering, the group has still not said how many bonds will be bought back and when investors will receive their money – information that was said to have been revealed in April.

Bondholders who have pressured the bid are paralyzed, unable to sell their bonds and forced to play a wait and see game, leaving many in financial trouble.

Last week, the action against Eros intensified when India’s market regulator – the Securities and Exchange Board of India – said it had found evidence of accounting irregularities at the group.

Just days earlier, Eros announced in London that it had agreed to sell a major subsidiary, Eros Now, to a private technology company controlled by the Lulla family. Eros says it has struggled to negotiate the best possible terms, but the company has not said how much it will receive from the deal or why it chose to sell to another Lulla family entity.

Furious investors say the deal violates the terms of the original bond issue and M&G must act. Financial advisory firm 365IM has filed a formal complaint with the FCA, accusing M&G of ‘failing to fulfill its duty as a trustee and acting in the best interest of bondholders’.

But M&G responded to these allegations, saying: “We are conducting our role in accordance with the bond documentation and liaising with both the company and bondholders.” The FCA declined to comment, but is closely monitoring events. Market watchers say that if Eros violated the terms of its prospectus, it should be a matter for the courts.

However, 20 percent of bondholders would have to agree before M&G can act on their behalf. It is clear that Eros has not yet paid M&G. Eros has not responded to any of the allegations.

The 365IM advisory firm is seeking support from bondholders to accelerate action. Bondholders wishing to join the 365 action group should contact the company at Alex Dunkley at alex.dunkley@365im.co.uk