Firstsource in talks with bondholders for $120-mn bonds

BPO firm Firstsource Solutions is in talks with Foreign Currency Convertible Bond (FCCB) investors to issue new bonds. CRISIL has downgraded Firstsource Solutions rating to “BBB” from “BBB+” on $85-million limited room refinance shortfall of $237-million worth FCCBs to be redeemed in December.

The bank financing of the shortfall appears less likely now and the company is considering an exchange offer with the bondholders said the CRISIL note.

CRISIL has downgraded Firstsource Solutions corporate rating to “BBB” from “BBB+” on limited room refinance shortfall of $85 million out of Foreign Currency Convertible Debentures (FCCBs) worth $237 million to be in December.

Firstsource has an outstanding FCCB worth $237 million that matures in December 2012. FCCBs are a type of bonds that can be converted into equity at maturity. If the share price of the issuer has fallen since, the investor could ask for redemption of the bonds in cash.

Its short-term bank facilities have also been downgraded to “A3+” from “A2”, CRISIL said in statement.

As on June 30, the company had a cash and bank balance of Rs 750 crore ($135 million). CRISIL believes Firstsource is likely to finalise a new agreement with the FCCB holders by the first week of November. The timeliness of completion of all formalities related to the new agreement is a key rating sensitivity factor, CRISIL said.