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Tulip Telecom, enterprise data services provider, has initiated discussions with its senior lenders to restructure its debt with longer maturity periods under the Corporate Debt Restructuring (CDR) mechanism.
This includes a moratorium on principal and interest payments.
Ongoing engagement
The debt-restructuring exercise will ensure better liquidity and enable the company to focus and strengthen its core operations.
With regards to an update on the company’s FCCB redemption, Tulip said that its ongoing engagement with bondholders continues to be both constructive and progressive, and it expects to reach an acceptable solution for all stakeholders at the earliest possible date.
Lt Col H.S. Bedi, Chairman and Managing Director, Tulip Telecom, said: “This is an important step towards strengthening our business by enhancing liquidity and inducing additional working capital. We believe this will help us safeguard the interests of our key stakeholders, including customers, employees and vendors.”
Adding further, he said, “The near term outlook is mixed, considering liquidity constraints and a volatile market environment, despite strong business fundamentals. However, we are confident of leveraging our extremely valuable and state-of-the-art infrastructure and an enviable clientele, over the longer term to post a healthy performance on a sustainable basis.”
Fitch rating
Credit rating agency Fitch had earlier downgraded Tulip Telecom from junk to default status following its failure to redeem its $97 million, or Rs 533.5 crore, outstanding foreign currency convertible bonds (FCCBs) by August 26.
Tulip had issued $150 million worth of zero coupon FCCBs in 2007-08 to finance capex and potential overseas acquisition costs. Till date, it has secured commitments of $50 million towards subscription of a fresh FCCB issuance, subject to the balance sum being deposited in through a bank debt into an escrow account initiated specifically for redeeming the existing FCCBs, the Fitch statement had said.
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