Franklin warns investors may lose for voting against $4 bn wind up plan

Franklin is seeking a simple-majority consent of unitholders on its proposal to wind up six plans.
Franklin Templeton Asset Management (India) Pvt. warned investors of potential losses if they vote against its plan to wind up more than $4 billion of debt funds it froze earlier this year.

Electronic voting will take place Dec. 26 to 28 on the asset manager’s plan, according to a statement from the company Monday.

Franklin is seeking a simple-majority consent of unitholders on its proposal to wind up six plans it had shuttered in April, which locked in 308 billion rupees ($4.2 billion) in the biggest forced fund closure ever in India.

The country’s top court asked the asset manager on Dec. 3 to initiate steps to meet unit holders in a week, as it agreed to hear Franklin’s appeal against a lower court verdict that had blocked winding up the debt funds without investor consent.

If the investors vote down the resolution, the shut funds “would be required to reopen immediately and may need an emergency liquidation of securities, if a high volume of redemption is received,” Franklin said in the statement. “This may entail distress sales of securities in order to meet the redemptions received.”

The Supreme Court is scheduled to hear the case next on Dec. 9.

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