Religare cos face ratings cut as RHC defaults on NCDs
Malvinder Singh and Shivinder Singh-owned RHC Holding Pvt. Ltd has failed to pay interest on its ₹200 crore on nonconvertible debentures by its June 30 deadline, prompting India Ratings and Research to downgrade the debentures to default status. RHC, along with Oscar Investments Ltd, owns financial services firm Religare Enterprises Ltd and healthcare provider Fortis Healthcare Ltd.
The ratings agency also put three Religare group firms — Religare Enterprises Ltd, Religare Finvest Ltd and Religare Housing Development Finance Corp. Ltd — on a negative rating watch list.
In a note dated Friday, India Ratings and Research said the downgrade reflects a default in servicing coupon obligations. “The downgrade of the ratings on other debt instruments reflects an impaired debt servicing capability due to a stretched liquidity position,” it said.
The downgrade comes in the wake of news reports that the Singh brothers were urgently looking to raise funds to meet immediate repayment obligations to prevent a default and that some lenders may have sold pledged shares. The company had, however, denied the reports.
Mint reported in its July 13 edition that RHC Holding was in talks with lenders for urgent funds to meet repayment obligations of Religare Enterprises Ltd. The company, the report said, is seeking to raise funds from companies including private equity firms KKR & Co and Piramal Enterprises. On July 11, shares of Religare Enterprises fell 20% on speculation that lenders may have invoked shares pledged by the promoters.
In June, India Ratings had warned that Religare Enterprises may have to borrow money to repay ₹s155 crore worth of debt and interest since the company was temporarily short of cash.
The Singh brothers have also been trying to refinance large sums of debt of the holding firm. In November, Mint had reported RHC Holding was in talks to refinance $300 million debt.
In its Friday note, the rating agency said RHC has been unable to meet its planned deleveraging target through the monetisation of non-core assets as planned, even though the firm has been able to reduce its debt to ₹2,950 crore as of March 31, 2017, from ₹4,130 crore in the previous year.
In April, Religare Enterprises said it has entered into a definitive agreement to sell its 80% stake in Religare Health Insurance Co Ltd to a group of investors led by True North. The transaction, which values the insurance firm at ₹1,300 crore, will fetch Religare approximately ₹1,040 crore. The deal, subject to various approvals, is yet to close. The debt reduction efforts have also been hampered by the delay in selling part of their holding in Fortis and SRL Diagnostics, for which the brothers have been in talks with various parties since end of last year.
THE SINGH BROTHERS HAVE BEEN LOOKING AT DIVESTING STAKES IN VARIOUS ASSETS TO PARE DEBT. THESE DEALS, HOWEVER, ARE YET TO BE CLOSED