AGS Transact Technologies faces insolvency over alleged unpaid dues

Indian payments services firm AGS Transact Technologies said on Saturday that a creditor plans to initiate insolvency proceedings against the company for non-payment of dues. 

Maxwel Aircon India Private Limited, an operational creditor of the company, has alleged default in repayments and sought an initiation of corporate insolvency in the National Company Law Tribunal, AGS Transact said in an exchange filing. Maxwel Aircon did not immediately respond to Reuters' request for comment. 

"The company is seeking appropriate legal advice and will take all appropriate steps to protect its interest in the aforesaid matter," AGS Transact said. 

AGS Transact provides digital and cash-based solutions to banks and corporate clients, including ATM services. 

The troubled firm defaulted on its dues in the last few months, leading to at least two credit rating downgrades and an exodus of all four of its independent directors, who cited personal reasons. 

The company, along with a unit involved in replenishing ATM machines with cash, had defaulted on dues, including loans, totalling 7.26 billion rupees ($83.1 million), according to exchange filings. 

Credit rating agency Crisil flagged the default and lowered the rating for the company's debt on February 4, and India Ratings downgraded its credit rating for the company on February 5, indicating it could potentially default on its debt payments. 

The company disclosed the default a week after Crisil's downgrade. 

The agencies cited a delay in receivables as the company was not able to meet the service-level agreements with its customers, which led to a sharp deterioration in liquidity, causing the company to miss interest payments on term loans in December and January. 

AGS Transact's shares were last down 5 per cent, extending their streak of hitting the exchange-allowed maximum limit, which started on February 4. The stock has slumped 62.4 per cent to a record low of 18.97 rupees during the period. 

The delay also led AGS Transact to report a loss in the December quarter, with its auditor raising doubts over the company's ability to continue as a going concern. 

IndusInd Bank, Investec Bank, Aditya Birla Finance, IDFC First Bank, SBM Bank (India), State Bank of India, Bandhan Bank, HDFC Bank, Dhanlaxmi Bank, SBI Global Factors, Bajaj Finance, and Federal Bank are its lenders. The lenders could not immediately be reached for comments.     

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