UK investors in £50m Bollywood bond crash

Thousands of British depositors are facing catastrophic losses after investing in a £50 million bond from Indian Bollywood film group Eros Media World.

Behind some of the most successful Indian films of all time, Eros is a leading player in the multi-billion pound Mumbai based Bollywood industry.

In 2014, the company issued a bond on the London Stock Exchange, with an annual interest rate of 6.5 percent, when savings accounts yielded little or nothing.

Numerous investors bought the bonds hoping to secure a generous income.

After Eros restructured the bonds in 2021 and extended the redemption date to April 2023, interest payments rose to an even more generous 8.5 percent per annum.

Last October, however, Eros failed to make its final interest payment, known in the bond market as a coupon.

The group, controlled by the wealthy Lulla family, said it was “determined to rectify this delay in coupon payment as soon as possible.” But investors have not received any money yet and fears are growing that the bond will not be repaid at all when it matures in April.

Not only has the company not provided information to bondholders since late last year, Eros Media World has also been forced to delist from the New York Stock Exchange after failing to provide any accounts for the past two years.

The price of the bond has fallen from £1 at launch to just 6.8 pence today. Now bondholders are clamoring for redress.

Several have written to the Financial Conduct Authority, which admits it is considering an investigation.

A letter seen in The Mail on Sunday explains that the regulator is reviewing the situation and may be using its “legal powers.” The letter states: “Not all violations of our rules or requirements are serious misconduct. However, if we suspect serious abuses, we will start an enforcement investigation.’

Eros has been contacted several times, but the company has so far said nothing.

There is also growing frustration with the trustee, US Bank, which is supposed to protect the interests of bondholders.

The trustee declined to comment to the MoS, but if bondholders with 20 percent of the bonds form a unified group, they can ask U.S. Bank to take action on their behalf. Until that time, the trustee has hardly any obligations.

City professionals believe the Eros saga highlights flaws in the stock market bond market, especially when companies don’t have stocks listed in London.

Eros bondholders have been left in the dark and neither the company nor the trustee are required to keep them informed.

An investor, hoping to use his bonds to pay back his mortgage, put £55,000 of his savings into the Eros transaction.

Another said, ‘I am originally from India and I know how popular Bollywood movies are. I really did my homework before investing in this bond and I don’t understand why we are in this situation.”

Others take solace in Eros Media World’s recent announcement of a successful deal with Saudi group Arabia Pictures. And sister company Eros International Media remains listed on the Indian stock exchange.

An action group is coming together through Alex Dunkley of financial advisor firm 365 to defend the interests of bondholders. Investors can email info@365im.co.uk. But 365 and others are increasingly concerned about the complex ties between Eros in India and Eros outside its home market.

Eros Media World is chaired by Rishika Lulla Singh. Her father, Kishore Lulla, a well-known figure in top Indian circles, is a director of the company and other members of the family are involved in the business.

Eros International Media, listed on the Mumbai stock exchange, also names Lulla family members on its board. The two companies have the same CEO, Pradeep Dwivedi.

The situation has caused a lot of commotion in urban circles. Panos Simou of 365, who has been active in the bond markets for 40 years, said of the Eros saga: “I have never encountered anything like it in my entire career.”