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Rolta Debt Plan Opposed by Bondholders Seeking Upfront Cash

(Bloomberg) -- Rolta India Ltd.’s attempt to reorganize about $500 million of defaulted bonds faces fresh opposition from a group of noteholders demanding an upfront payment before consenting to the restructuring.

The group, which owns almost 20 percent of 2018 bonds issued by the technology company, has approached an investment bank and law firms to devise an alternative to the proposal by a rival set of creditors, according to Eric Kraus, a money manager at Moscow-based Nikitsky Capital.

Rolta agreed a revised proposal with that ad hoc committee of creditors earlier this month, some two years after it went into default. That agreement entails a $53 million upfront payment, issuing $500 million of new notes, and giving Rolta an extra option to redeem the new securities at $152 million within 90 days. An earlier debt settlement effort collapsed in April after Rolta failed to provide a $20 million security deposit.

“We will seek to block the take-it-or-leave-it proposal as currently tabled by the committee,” Kraus said in an email interview on Tuesday. “The early redemption option is particularly objectionable,” given the scale of the haircut, he said.

Three phone calls to Rolta went unanswered. Amit Jain, the head of legal, didn’t immediately reply to an email seeking comment. Moelis & Co., the financial adviser to Mumbai-based Rolta, declined to comment. Houlihan Lokey Inc., which advises the ad hoc committee, didn’t reply to requests for comment.

Good Faith

Rolta defaulted on $127 million of 2018 notes in June 2016 and $372 million of 2019 bonds in August that year after missing coupon payments. The notes started tumbling in April 2015 after Glaucus Research Group California LLC released a “strong sell” report. While Rolta rejected the concerns over its accounting outlined by Glaucus, rating companies later said they were kept in the dark over the company’s finances.

Rolta’s 2018 notes dropped 0.6 cents on the dollar to 20.6 cents at 5:42 p.m. Hong Kong time and traded as low as 9.2 cent this month.

Kraus said his group, which isn’t involved in the ad hoc committee, is willing to support the committee’s proposal if the early-redemption option is dropped. All agree “that no consent should be granted until a good-faith and inclusive negotiation is held,” he said.

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