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

Fecha: 18-Jun-2025

The Second Bond Issue

The Second Bond Issue

26.

By late September 2024, Eraaya (in order to repay the bridging finance that had been required to complete the purchase of Ebix) explored the issuance of the second tranche of bonds, notifying Elara of its intention. However, the evidence suggests that investor apprehensions surfaced, owing to Eraaya's delays in fulfilling obligations specified in the Offering Circular, particularly the creation of a pledge over the shares in Ebix . This was not obliged to be completed yet; as Eraaya pointed out Eraaya could not grant a pledge over shares in Ebix until it owned Ebix. However by this point Eraaya did own Ebix (or at least 97.58% of it) and had done so for some weeks – and yet not even a first draft agreement had emerged.

27.

There is evidence before the Court indicating that one potential investor, Selvi, raised these concerns with Elara. Elara was not able to put Selvi’s concerns at rest. On the contrary:

Mr Mammen (of Elara) told Mr Gautam Krishna (of Selvi) that the Collateral had not yet been put in place;

Mr Krishna told Mr Mammen that he required assurances that the Collateral would be put in place before any funds invested in the Second Allotment would be released to Eraaya. Specifically, Mr Krishna told Mr Mammen that “Selvi was interested in investing in the Bonds but that it would only do so on condition that GLAS would not be able to pay Selvi’s purchase money to [Eraaya] until the pledge over the shares in Ebix had been put in place”;

Mr Mammen also told Mr Krishna that there was a possibility that US$20m of the proceeds from the Second Allotment would need to be released to Eraaya to repay a loan from an entity called Oyster Bay (the terms of which loan Mr Krishna was not aware). Mr Krishna told Mr Mammen that Selvi was content for this to happen, on condition that the remaining US$40m would not be released to Eraaya until the Collateral was in place. Mr Mammen also informed other potential investors MGF and Bull Value about the existence of a loan from Oyster Bay;

In order to address the Bondholders’ concerns, Mr Mammen suggested to Mr Pankaj Gupta, Eraaya’s representative, the possibility of putting in place an escrow arrangement. Following those discussions, Eraaya and Elara instead “agreed” to provide “protection for [the] bondholders” by amending the First Settlement Agency Agreement.

28.

In this connection, Elara procured that a revised draft Settlement Agency Agreement with GLAS was sent to Eraaya. Eraaya executed this agreement dated 1 October 2024 (“the Second Settlement Agency Agreement”). This was largely in the same terms as the First Settlement Agency Agreement. However clause 3.4 was amended (new text highlighted for ease of reference in bold):

“Once all the trades have settled, on receiving confirmation from Elara Capital PLC by email the Settlement Agent will make Issue Fees & Expenses payments if any as per Issuer’s irrevocable instructions under Schedule 3 of this Agreement and subsequently on receiving confirmation from Elara Capital PLC by email transfer the remaining Purchase Monies to the Issuer’s Payment account in one or more tranches.”

29.

Thus, clause 3.4 was amended to introduce a requirement for a “confirmation” from Elara, which was not present in the First Settlement Agency Agreement. In addition to the extent that the history of the negotiations is admissible and relevant (see further below) the evidence presently available suggests that that change “was inserted to provide a simpler alternative to a conventional escrow arrangement”.

30.

On 3 October 2024, Eraaya issued a further US$ 60 million of bonds (“the Second Bond Issue”). The Bondholders hold the following amounts of the Bonds issued in the Second Bond Issue: (1) Selvi owns $46.9m; (2) MGF owns $5m; and (3) Bull Value owns $4m.

31.

On 4 October 2024, the first draft of the Pledge Agreement was sent by Eraaya’s lawyers to GLAS’s lawyers. The draft agreement was for a pledge:

To be effective immediately upon execution (i.e. whether or not the proceeds of the Bonds had been disbursed by GLAS);

Over “all of the issued and outstanding stock owned by the Obligor in the Pledged Company” (i.e., reflecting the actuality, not over 100% of the shares).