Rolta bondholders form on default

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.

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% 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,accordingtoone source familiar with the formation of the group.

Fitch said that delays in payments by the Indian government,alongwithbanks'reluctancetolend,hadtriggered a severe liquidity crunch at Rolta.

The agency estimated that over 45% 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 yearearlier.Banks'reluctance to lend to Rolta comes at a time when India is taking measures to clean up the 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',dueto 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. Reuters