Eros International plunges 20% despite clarification on credit rating cuts

Eros International plunges 20% despite clarification on credit rating cuts

The company said the credit rating downgrade was on account of a delay in servicing of bank loans for the month of April and May and would be cleared

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The company said the credit rating downgrade was on account of a delay in servicing of bank loans for the month of April and May and would be cleared within the next seven working days.

SI Reporter  |  Mumbai 

Shares of Media on Friday plunged 20 per cent to hit a new low of Rs 42.50 despite the company’s clarification on downgrade by CARE Ratings, which had cut its long-term loan facilities ratings from ‘BBB-‘ to ‘D’.

The movies and entertainment company said the rating downgrade was on account of a delay in servicing of bank loans for the month of April and May and would be cleared within the next working days.

said that “it would like to clarify that its utilisation is less then Rs 550 crore as compared to Rs 750 crore facilities assessed by the Rating Agency as per the bank’s sanctioned letters”.

The stock has tanked 36 per cent in the past two trading days after the rating downgrade.

said on Wednesday that the revision in the ratings assigned to the bank facilities of Media was on account of ongoing delays/default in debt servicing due to slowdown in collection from debtors, leading to cash flow issues in the company.

“CARE had interacted with EIML’s bankers and had obtained ‘Default if any’ statements from the company which mentioned delays/default in debt servicing (both principal and interest) in the terms loans availed by the company,” rating agency in rating rational said, adding that the company had also obtained statements regarding delay in servicing interest on cash credit and packing credit for more than 30 days, and a delay of more than 30 days in payment of bills.

At 09:32 am, Eros International was trading 18 per cent lower at Rs 43.70 on the back of heavy volumes. The trading volumes on the counter jumped over nine-fold with a combined 3.15 million shares changing hands on the and so far.

First Published: Fri, June 07 2019. 09:34 IST

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