UK investors in £50m Bollywood bond crash

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

Eros, behind some of the most successful Indian movies of all time, 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, offering 6.5 per cent annual interest, when savings accounts were paying little or nothing.

Numerous investors bought the bonds in the hope of securing a generous income.

After Eros restructured the bonds in 2021, extending the repayment date to April 2023, interest payments rose to an even more generous 8.5 per cent a year.

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

The group, controlled by the wealthy Lulla family, said it was ‘committed to rectifying this delay in payment of the coupon as soon as possible’. But investors are yet to receive any money and there are growing fears that the bond will not be repaid at all when it falls due in April.

Not only has the company failed to provide any more information to bondholders since late last year, but Eros Media World has been compulsorily delisted on the New York Stock Exchange after failing to provide accounts for the past two years.

The bond price has slumped from £1 at launch to just 6.8p today. Now, bondholders are clamouring for redress.

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

A letter seen by The Mail on Sunday explains that the regulator is reviewing the situation and may use its ‘statutory powers’. The letter states: ‘Not all breaches of our rules or requirements constitute serious misconduct. However, where we suspect serious misconduct, we will start an enforcement investigation.’

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

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

The trustee declined to comment to the MoS but, if bondholders with 20 per cent of the bonds form a unified group, they can ask US Bank to press for action on their behalf. Until such time, the trustee has very few obligations at all.

City professionals believe the Eros saga unveils shortcomings within the Stock Exchange bond market, particularly when firms do not have shares listed in London.

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

One investor, hoping to use his bonds to repay his mortgage, put £55,000 of his savings into the Eros transaction.

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

Others have taken comfort from Eros Media World’s recent announcement of a blockbuster deal with Saudi group Arabia Pictures. And sister firm Eros International Media remains listed on the Indian stock exchange.

An action group is coming together through Alex Dunkley of financial adviser firm 365 to defend bondholders’ interests. Investors can email at info@365im.co.uk. But 365 and others are increasingly worried about the complex links 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 firm and other members of the family are involved in the business.

Eros International Media, quoted on the Mumbai stock exchange, also cites Lulla family members on its board. The two companies have the same chief executive, Pradeep Dwivedi.

The situation has caused a stir in City circles. Panos Simou of 365, who has been involved in bond markets for 40 years, said of the Eros saga: ‘I’ve never come across anything like this in my entire career.’