Fitch Ratings has downgraded India based Tulip Telecom Limited's (Tulip) National Long Term rating to 'Fitch D(ind)' from 'Fitch BB+(ind)'. The agency has also downgraded Tulip's INR1.25bn non-convertible debentures to National Long-Term 'Fitch C(ind)' from 'Fitch BB+(ind)'. All the ratings have been removed from Rating Watch Negative (RWN).
The downgrade reflects Tulip's inability to timely redeem its USD97m outstanding foreign currency convertible bonds (FCCBs), which were due for redemption on 26 August 2012 at a premium of 44.506%. Out of the total redemption amount of USD145m, the company has so far arranged only INR4bn (USD72m) through rupee debt. It has received firm commitments of USD50m towards the subscription of a fresh FCCB issuance, subject to the balance amount being deposited through a bank debt into an escrow account initiated specifically for redeeming the existing FCCBs.
Tulip is raising the balance amount for redeeming FCCBs and expects to complete the process by 10 September 2012.
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