CL-2025-000062 - [2025] EWHC 1506 (Comm)

Fecha: 18-Jun-2025

The Offering Circular

The Offering Circular

14.

The terms and conditions (T&Cs) of the Bonds are set out in the Offering Circular and the Global Certificate. On 23 August 2024, Eraaya issued an Offering Circular in respect of bonds of up to US$120 million (to be issued in two tranches of US$60 million each). This Offering Circular clarified in the opening paragraph of its text that the proceeds were designated for the acquisition of Ebix and stipulated that “the performance of all the obligations of the Issuer under the Bonds will be secured by pledge of 100% equity shares of EBIX Inc. part funded through the Issue Proceeds (the “Collateral”).”

15.

Other terms of the Offering Circular made it clear that the pledge should be put in place within 90 days of the Issue Date of 23 August 2024 (i.e. by 21 November). In addition, if the value of the pledged shares was less than the amount outstanding on the Bonds a Shortfall Amount was to be paid to the Security Agent.

16.

Other relevant provisions of the Offering Circular were that:

The Bonds would bear interest of 9.5% per annum from the Issue Date;

“The fund requirement and deployment mentioned in the Objects of the Issue have not been appraised by any bank or financial institution. The fund requirement and deployment are based on internal management estimates and has not been appraised by any bank or financial institution. The management will have significant flexibility in applying the proceeds received by us from the Issue”;

“The aggregate net proceeds received by the Company from the offer will be used towards the acquisition of 100% Equity of EBIX Inc. Pending the use of the net proceeds from the offering for the purposes described above, the Company intends to invest the net proceeds in the instruments as permitted by applicable laws or regulations issued by RBI and the Govt. of India”;

“The net proceeds from the issue of the Bonds are estimated to be approximately US$58.8 million after deducting the issue expenses of the offering. The aggregate net proceeds received by the Company from the offer will be used towards the acquisition of 100% Equity of EBIX Inc. Pending the use of the net proceeds from the offering for the purposes described above, the Company intends to invest the net proceeds in the instruments as permitted by applicable laws or regulations issued by RBI and the Govt. of India.”

17.

As regards collateral it was inter alia provided that:

“The Bonds constitute direct, general and unconditional obligations of the Issuer and the performance of all the obligations of the Issuer under the Bonds are or, as the case may be will be secured by, inter alia, a fixed charge (by way of pledge) over the “Collateral”. The charge created on the Collateral will be created in favour of the Security Agent under the Collateral Documents for the benefit of the Bondholders.”

“The obligations of the Issuer with respect to the Bonds and the performance of all the obligations of the Issuer under the Bonds will be secured by way fixed charge on the Collateral, and will consist of the following:

~ 100% Pledge of Equity Shares of EBIX Inc.

The Issuer shall ensure that the market value of the Collateral is not less than the amount outstanding on the Bonds, provided further if the market value of the Collateral is less than the amount outstanding on the Bonds, then the Issuer shall be liable to pay to the Security Agent, the Shortfall Amount. In the event of sale of the Collateral by the Security Agent and after realization of the sale proceeds of the Collateral, if there is any shortfall in the amounts payable to the Bondholders, the same shall be paid by the Issuer to the Security Agent forthwith upon receipt of notice of the same.

Collateral Documents

For the purpose of creating the Collateral, the following documents are proposed to be executed in favour of the Security Agent, acting for the benefit of the Bondholder within 90 days from the Issue Date of the Bonds.

Deed of Pledge by the Issuer

A deed of Pledge will be executed by the Issuer for the purpose of securing for the benefit of the Bondholders.

In compliance with the ECB Guidelines, the Issuer will obtain necessary permission from its authorised dealer to create security interest on the Collateral in favour of the Security Agent to secure the obligations of the Issuer in respect of the Bonds.”

“To the extent that any of the Collateral Documents required in connection with the creation, perfection and registration of the fixed charge over the Collateral have not been executed and delivered on or prior to the Issue Date, or the Issuer has not procured the registration of such security interests on or prior to the Issue Date (in each case, to the extent required by the Collateral Documents), the Issuer shall (i) ensure that all such actions are completed as soon as reasonably practicable, and in no event later than 90 days following the Issue Date and (ii) deliver, or cause to be a delivered, to the Security Agent, a certificate signed by two authorised signatories of the Issuer confirming that all such actions have been completed …”

Under “Events of Default” it was provided that “Failure of any Collateral Document to provide security: except as expressly permitted by the applicable Collateral Documents, any Collateral Document at any time for any reason shall cease to be in full force and effect in all material respects, or shall cease to give […] the rights, powers, privileges and priority purported to be created thereby, and such failure continues unremedied for 14 consecutive days after the earlier of (i) the Issuer obtaining knowledge thereof or (ii) the Bondholders giving written notice thereof to the Issuer”

18.

In addition:

The Bonds carried with them a right to convert into shares at any time during the “Conversion Period” which covered most of the period of the Bonds;

Eraaya was required to “ensure” its Board was made up of seven directors, four of whom were to be nominated by the Bondholders and to “take and procure the taking of all corporate action required” to effect this;

Eraaya was required to “obtain and maintain in full force and effect all governmental approvals, authorizations, consents, permits, concessions and licenses [… as are necessary to (i) enter into, and perform its obligations under, the Notes and the Collateral Documents and (iii) ensure the legality, validity, enforceability or admissibility in evidence in its jurisdiction of incorporation of the Notes and the Collateral Documents, (II) preserve and maintain good and valid title to the Collateral, free and clear of any Liens; and (Ill) comply with all laws, regulations including the FEMA ODI Regulations and compliant with all filing requirements thereto in relation to the Bonds.”

19.

In the Risks section one risk identified was:

“The fund requirement and deployment mentioned in the Objects of the Issue have not been appraised by any bank or financial institution.
The fund requirement and deployment are based on internal management estimates and has not been appraised by any bank or financial institution. The management will have significant flexibility in applying the proceeds received by us from the Issue.”

20.

The risks associated with the need to create the security interests were flagged in a section entitled “Risks Relating to the Bonds and Shares” thus:

“The failure of the Issuer to properly create and register the security interests in the Collateral securing the Bonds could result in an event of default under the Bonds, and could impair the ability of the holders of the Bonds to seek repayment
The Issuer will be obligated to create and register the Collateral, or to take all commercially reasonable steps to create and register the Collateral securing the Bonds. Until the Collateral Documents are entered into the Bonds will be unsecured. If the Issuer fails to take commercially reasonable steps to or fails to create and register the applicable Collateral in the form and manner prescribed, an Event of Default will occur and Security Agent could enforce the security over the Collateral. In such circumstances, the Issuer may not have sufficient resources to repay the Bonds, in full or at all.”