Standard and Poor’s (S&P) on Monday lowered its long-term corporate credit rating on Rolta India to ‘D’ (Default) from ‘SD’ (Selective Default) due to missed interest payments. The rating agency has also lowered the long-term issue rating on the 2018 senior unsecured notes issued by Rolta LLC to ‘D’ from ‘CC’. These notes are guaranteed by Rolta.
“We downgraded Rolta because the company failed to pay the $6.8 million interest due on its 2018 senior unsecured guaranteed notes, even after the expiry of the 30-day grace period,” S&P observed in a media release.
However, S&P has maintained ‘CC’ rating on the 2019 senior unsecured notes. These notes are on CreditWatch with negative implications.
Bloomberg data shows that at the end of March 2016, the firm’s total debt stood at R5,473.60 crore. In FY16, net profits fell 23% to R189.11 crore on the back of R3,799.59 crore in revenues. The firm had an interest outgo of R476.74 for the year.
In the media release, the agency observed that the management of Rolta had expected the trustee to make the coupon payments from its interest reserve account however it didn’t happen yet. “Rolta’s $35 million bank loans due since March 31, 2016, also remain unpaid,” S&P said.
Rolta LLC, a wholly owned subsidiary of Rolta International, issued $200 million, 10.75% senior notes in May 2013. In October 2014, the company exchanged 36.67% of its 10.75% senior notes against 8.875% senior notes of Rolta Americas amounting to $73.34 million.
In December 2015, Rolta India stated that Rolta Americas had bought back $5.65 million in-principle out of the outstanding $373.345 million 8.875% senior notes due 2019 via open market repurchase transaction. “After this repurchase, the aggregate principal amount of bonds outstanding is $367.695 million,” it had said.
In April 2015, a California-based company named Glaucus Research Group had stated in its report that it suspected Rolta approached foreign bond markets because it was unable to borrow in India.Rolta had denied the contents published in the report.
“Ultimately, we believe that bondholders and ratings agencies have failed to price in evidence that Rolta has materially misstated its financial performance and the risk that Rolta will default on its junk bonds. We value the bonds at the recovery value of the offshore assets, which we estimate to be $0.16 on the dollar,” it stated. Rolta had denied the contents published in the report.