Poor response forces Dhanlaxmi Bank to extend last date for Rs 200 cr bond issue

Thrissur, Kerala-based Dhanlaxmi Bank has extended the last date for subscribing to its Rs 200-crore tier-II bond offering to June 1 from May 21 as the bank is struggling to find investors. The bond issue, which has coupon of 11.9% for 71 months and 11.95% for 84 months, opened on April 27.

"We had launched the bond on April 27. However, we started the marketing only on May 1. Based on the subscription, we have the liberty to extend the subscription date," said PG Jayakumar, managing director and chief executive officer, Dhanlaxmi Bank. AK Capital is the lead arranger to the issue.

The old-generation private lender had expressed plans to raise Rs 400 crore by issuing subordinate debt and equity capital in fiscal 2012-13.

The bank will raise tier-II capital of Rs 200 crore in the first quarter and equity capital of Rs 200 crore in the second quarter. The bank's capital adequacy ratio stood at 9.88% as on December.

"The bank has received subscription from some public sector banks," said a source in the know of the development.

The bank's profitability has been under strain over the past few quarters on rising expenses. PG Jayakumar took over the rein of the bank in February, when Amitabh Chaturvedi quit following differences with the management.

To cut cost, the new CEO has cut salaries by 40% and rationalised manpower, and cut corporate business unit size. The bank is also shifting focus to high-yielding businesses such as gold loans in a bid to boost its financials and cut cost.

The bank's employee strength has fallen to about 4,200 from 4,600 in February.

Source: EconomicTimes