Experts say that the ratings continue to remain on Credit Watch with Negative Implications.
As per agency, “The downgrade in ratings factors the deteriorating financial flexibility of the group marked by increased pledge of promoter holding to the level of 96%, continuous volatility in share price movement of ZEEL resulting in substantial decline in market capitalization, and promoter group unable to repay full debt against pledge of ZEEL shares as per the committed timelines.”
As reported, Russia’s VTB Capital, acting on behalf of certain lenders recently disclosed that it has secured rights of 102 mn shares (10.7% stake) in ZEEL held by Essel Media Ventures, a promoter group company, against a loan agreement entered into during September 2017.
So, in case promoters fail to resolve the issue of debt at the promoter group level, it may lead to invocation/sale of pledged shares by the lenders. All these issues will substantially bring down promoters’ holding, resulting in uncertainties about Ownership and Management control.
The ratings continue to be on “Credit Watch with Negative Implications” on account of the overhang of debt at promoter group levels and stretched pledge position of the group holdings in ZEEL and resultant uncertainties.