Rolta India Bondholders Band Form Group To Negotiate Restructuring After Default

Hong Kong: Bondholders are forming a group to negotiate a debt restructuring at Rolta India, 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, failed to make a coupon payment on its $126 million bonds due 2018 that was scheduled to be made 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 coupon on its $300 million 2019 notes on July 24.

Over 25 per cent of the holders of the two bonds have agreed to join the group being organised by Investment bank Houlihan Lokey and law firm Ropes & Gray, according to one source familiar with the formation of the group.

Fitch said that 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 over 45 percent of Rolta's 2015 revenue of $560 million was related to the Indian government, mainly for defence services.

It said that 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.

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.

Rolta did not immediately respond to a request for comment.

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