Tulip Telecom initiates talks with lenders for debt restructuring

Tulip Telecom is set to undergo a corporate debt restructuring (CDR) programme. The enterprise data service provider has approached its lenders to restructure its debt with longer maturity periods, including a moratorium on principal and interest payments.

The debt restructuring is targeted to ensure better liquidity and enable the company to focus and strengthen its core operations.

At the end of September 2012, Tulip Telecom had a total debt of Rs 2,400 crore. More than 90% of shares held by promoters — who own about 68% in the company — is pledged with lenders.

However, the company is still in discussions with the FCCB holders on FCCB redemption. In a statement issued on Monday, the company said that the engagement with bondholders is constructive and progressive, and it expects to reach an acceptable solution for all stakeholders at the earliest possible date.

”Tulip has built a strong infrastructure for its enterprise data business, which involves significant investments. The company, in consultation with its senior secured lenders, has taken the decision to restructure the debt so as to enable the company to repay its debt over a longer period, thus easing the debt and interest burden. Our senior lenders have shown support of our long-term business plans and are supportive of our efforts to achieve a sustainable debt structure,” said H S Bedi, Chairman and Managing Director, Tulip Telecom.

"This is an important step towards strengthening our business by enhancing liquidity and inducing additional working capital. We believe this will help us to safeguard the interests of our key stakeholders, including customers, employees and vendors,” he added.

Considering its liquidity crunch, the near term outlook is mixed for the company. “We are confident of leveraging our valuable infrastructure and an enviable clientele, over the longer term to post a healthy performance on a sustainable basis,” said Bedi.

The Tulip Telecom stock was trading at Rs 32.70, down by Rs 1.25 or 3.68%.