Rolta bondholders form group to negotiate restructuring (updated)

Rolta India

17/06/2016 15:59

* Rolta failed to make coupon payment on $126 mln bonds due 
2018 
    * Over a quarter of Rolta bondholders have agreed to join 
group 
    * Rolta says working with banks, advisors to find solution 
 
 (Adds Rolta statement) 
    By Umesh Desai 
    HONG KONG, June 17 (Reuters) - Rolta India Ltd  ROLT.NS  
bondholders are forming a group to negotiate a debt 
restructuring after the software services provider failed to 
make interest payments, according to a document seen by Reuters 
on Friday. 
    Rolta, whose biggest customer is the Indian government, said 
late on Friday its management was working on "addressing the 
overall situation in a comprehensive manner", blaming the cash 
crunch on significant expenses on a defence project and delays 
in payment collections. 
    Rolta failed to make a coupon payment on its $126 million 
2018 bonds  775793AA0=  due last month and whose grace period 
expired this week. It had earlier failed to make payments on a 
$35 million loan.  
    It is now scheduled to pay the coupon on its $300 million 
2019 notes  775788AA0=  on July 24. Both notes due 2018 and 2019 
are trading at distressed levels of 16/18 cents on the dollar. 
    More than 25 percent of the holders of the two bonds have 
agreed to join the group being organised by Investment bank 
Houlihan Lokey  HLI.N  and law firm Ropes & Gray, according to 
one source familiar with the formation of the group. 
    Rolta said in a stock exchange filing its management was 
working with banks and strategic advisors. 
    "The aim is to arrive at an acceptable solution in the 
interest of all stakeholders and the company will be informing 
all stakeholders at the earliest possible opportunity and is 
committed to finding a viable resolution," it said. 
    On Thursday, Fitch said delays in payments by the Indian 
government, along with banks' reluctance to lend, had triggered 
a severe liquidity crunch at Rolta. 
    The agency estimated that more than 45 percent of Rolta's 
2015 revenue of $560 million was related to the Indian 
government, mainly for defence services. 
    It said Rolta's receivables as at end-March 2016 had 
increased substantially to $288 million, or about 190 days of 
its revenue, from 126 days a year earlier. 
    Banks' reluctance to lend to Rolta comes at a time when 
India is taking measures to clean up a banking system weighed 
down by $121 billion of bad debt. 
    Fitch cut Rolta's rating to RD or restricted default, from 
CC, and S&P Global lowered its rating to SD, or selective 
default, from CCC-minus, due to missed interest payments. urn:newsml:reuters.com:*:nFit961027 
 urn:newsml:reuters.com:*:nEMN55AOK8 
    Restricted default indicates there has been a failed payment 
but the company is yet to file for bankruptcy. A selective 
default indicates default on a specific issue or class of 
obligations but the borrower is expected to continue meeting its 
other payment obligations in a timely manner.     
 
 (Reporting by Umesh Desai; Aditional reporting by Devidutta 
Tripathy in Mumbai; Editing by Simon Cameron-Moore and Susan 
Fenton) 
 ((devidutta.tripathy@thomsonreuters.com; +91 84518 40430; 
Reuters Messaging: 
devidutta.tripathy.thomsonreuters.com@reuters.net)) 
 
Keywords: ROLTA BONDHOLDERS/RESTRUCTURING