ICRA downgrades Fortis Healthcare for missing loan repayment

Credit rating agency ICRA Ltd downgraded Fortis Healthcare’s outstanding debt obligations of Rs 1,170 cr after the company missed the repayment of a loan.

The company’s long term rating for Rs 250 crore non-convertible debenture programme, Rs 105 crore fund-based limits, and Rs 195 crore term loans has been revised from  BBB- to C.

It also downgraded the short-term rating for Rs 600 crore commercial paper programme and Rs 20 crore non-fund-based
facilities from A3 to A4.

The ratings have been removed from watch with negative implications, it added.

ICRA said the rating action on the company, which has been under cloud over unauthorized lending of money to entities related to its key shareholders, takes into account delay in servicing of a loan not rated by ICRA.

“The delay was on account of stretched liquidity position of the company along with its inability to roll over or refinance the loan.

“The ratings continue to be constrained by concerns pertaining to recoverability of the advances extended to related parties, potential impact of various ongoing investigations/litigations, deterioration in operational performance and large payments being made to Religare Health Trust,” it said.

ICRA did not say how big the loan was, but said the unrated loan was due for repayment on April 5.

It also said it was drawing comfort from Fortis’s apparent’ strong liquidity position, but the advances to related parties are expected to have “severely restricted” the company’s financial flexibility.

It also said it has seen a decline in performance of the hospital in the first nine months of last financial year due to cap on prices of cardiac stents & knee implants and pricing pressure in its diagnostic business.

“Significant outflows towards business trust fee- Though the quantum of fee paid to Business Trust will reduce after acquisition of economic interest in Fortis Hospotel Limited, it will continue to have significant impact on the cash flows and consequently the debt coverage indicators of the company,” it added.