InvestorQ : What was the outcome of the meeting between the trustees of Franklin Templeton mutual fund and the unit holders regarding the 6 debt schemes that were shut down?
Deepa Salunkhe made post

What was the outcome of the meeting between the trustees of Franklin Templeton mutual fund and the unit holders regarding the 6 debt schemes that were shut down?

Answer
image
Arya Nanda answered.
4 months ago
Follow

The first meeting of the trustees and the unit holders of the 6 debt schemes that Franklin Templeton India had shut down in April 2020 was held on Tuesday. Templeton President, Sanjay Sapre started on the defensive, denying allegations that the fund may have tipped some high value investors to redeem before the fund closure.

The last day for unit holders to vote on the winding up of the six beleaguered schemes of Templeton MF was 29 December. Sapre and the other members of the Templeton management have been trying to instil fear in the minds of unit holders that if they don’t vote for the winding up, they may lose their capital. Unit holders were not convinced.

Surprisingly, even the trustees who are supposed to act as trustees of the interests of the unit holders, were found to be joining chorus with Sapre. However, the unit holders were more concerned about the details of the recovery of amounts, details of the forensic audit and whether the findings will be made public or note.

Some of the investments of the Franklin India Short Term Income Plan was stuck in companies like Essel Group, ADAG group and Yes Bank; all with limited revenue visibility. Many of these companies where FT holds bonds are NCLT cases and the resolution may take a very long time and till then the unit holders will have to wait.

As of date, the fund has recovered less than 30% of the outstanding amounts and it is still not clear if the balance will have to be written off or whether people can still hope that someday they can recover their monies. As Sapre himself admitted sheepishly, FT schemes had significant exposure to below AAA-rated securities; which caused this problem

On the subject of available funds for distribution, Sapre admitted that schemes like Franklin Income Opportunities Fund had to repay to banks first and only net amounts will be available for distribution. The first priority is to see how these funds can be made cash positive first before the process of distribution even commenced.

On the subject of making the forensic audit report public, Sapre dodged the question and pointed that the Karnataka High Court and the Supreme Court had directed SEBI to submit the findings to them in a sealed cover. The outcome of this vote will be submitted to SEBI along with the report of the scrutinizer.

In short, the situation is not too encouraging for the unit holders. They already have their money locked up for last 8 months and the management of Templeton continues to be indifferent to the unit holders.
1 Views