Samvardhana Motherson Arm May Acquire Prysm Systems' Assets Via Foreclosure, Auction

Samvardhana Motherson International Ltd. announced on Thursday that its indirect wholly owned subsidiary MSSL Consolidated Inc. has decided not to exercise its option to convert the notes provided by Prysm Systems Inc. into equity capital.

According to the exchange filing, as conditions precedent to the conversion of outstanding 12% optionally convertible secured notes were not satisfied by Prysm, MSSL Consolidated was not exercising the option.

Last year, in August, the company had informed via stock exchange filings that its subsidiary, MSSL Consolidated, had invested in 12% optionally convertible secured notes of Prysm Systems Inc.

Even at that time, the company had stated that MSSL Consolodiated had not converted the convertible secured notes because it was not satisfied with Prysm's performance.

The company added that due to delays and financial issues with a joint development project, MSSL Consolidated was acquiring the assets of Prysm by using the foreclosure and public auction process.

Among the issues that the company pointed out were the lag in development of the Gen 3 prototype in keeping with the agreed specification and associated conditions. Also, the development of the prototype requires additional funding to complete related work and processes, the filing said.

It added that MSSL Consolidated was initiating the public auction of Prysm’s assets and other activities to ensure continuity of the development work and to ensure full ownership of the resultant assets and the pathbreaking patented technology.

MSSL Consolidated has served notice of Prysm’s default under all outstanding notes, aggregating to $19.88 million. This includes convertible debt of $15.26 million and non-convertible debt of $4.6 million at 12%.

The filing added that in response to MSSL Consolidated's actions, Prysm itself had initiated a foreclosure process on Jan. 8, 2025. This foreclosure move by Prysm may lead to MSSL Consolidated acquiring the title to substantially all of Prysm’s assets upon finalisation and execution of a statutory foreclosure process and public auction of Prysm’s assets.

The filing added that MSSL Consolidated has agreed to provide "drip financing" of up to $3,800,000 so as to keep Prysm operating during the foreclosure and auction process.

The filing also added that the development will not have any adverse impact on profitability.

the company. As the investment in Prysm was made at an early stage, there was high risk associated with the development. So, it had already provided for these investments over a period through "conservative accounting policies."

It said that additional details on the foreclosure process will be intimated before the end of the fiscal year ending March 31, 2025.

Shares of Samvardhana Motherson International Ltd. closed 1.75% lower at Rs 148.70 apiece on the BSE, compared to a 0.68% decline in the benchmark Sensex.