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CARE Ratings downgrades Eros International to default

The company tapped a credit line of Rs 750 crore through a combination of long-term and short-term bank loans, and other forms of bank credit.

, ET Bureau|
Jun 05, 2019, 11.49 PM IST
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The downgrade will likely hit EIML’s fund raising plans.
MUMBAI: Rating company CARE has cut the creditworthiness of entertainment firm Eros International Media (EIML), citing delays or likely defaults in serving debt availed from banks.

The company tapped a credit line of Rs 750 crore through a combination of long-term and short-term bank loans, and other forms of bank credit.

The downgrade will likely hit EIML’s fund raising plans.

“As per the management, the delays/default in debt servicing is on account of slowdown in collection from debtors leading to cash flow issues in the company,” CARE said in a statement.

It has lowered the long-term loan facilities to ‘D’ or default from BBB-, a plunge in grades by several notches reminiscent of the sharp downgrades at infrastructure conglomerate IL&FS.

CARE interacted with EIML's bankers. The defaults/delays included both principal repayments and interest payments. In some cases, delays extended to more than 30 days for servicing interest on cash credit and packing credit, and a delay of more than 30 days in payment of bills.

“Eros tried to raise dollar bonds last year, but that effort failed. This year too, it had similar plans,” said an investment banker with knowledge of the matter.

Eros shares were at Rs 66.35 Tuesday, little changed on BSE. Financial markets were shut Wednesday in Mumbai.

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