Fitch Ratings says there is no impact on Bahrain Telecommunications Company’s (Batelco; BBB-/Negative) ratings, following the Supreme Court of the Seychelles’ recent declaration of bankruptcy of Mr. Sivasankaran, a creditor of a Batelco subsidiary.
According to Batelco, BMIC Limited (BMIC), a wholly owned subsidiary of the Batelco Group of Companies, is the largest creditor of Mr. Sivasankaran’s bankrupt estate and will pursue all legal avenues to recover the outstanding judgment debt from his global assets. BMIC has successfully obtained from the High Court of England both a judgment against Chinnakannan Sivasankaran and Siva Limited (the defendants) for USD212m and an indefinite worldwide freezing order against the defendants’ assets. Fitch does not include this in its rating case.
BMIC originally acquired a 42.7% stake of Indian-registered S Tel in 2009. S Tel was awarded a 2G Licence in 2008. Following the cancellation of 2G licences by India’s Supreme Court in February 2012, BMIC sought to implement a put option agreement with the defendants, which under certain circumstances, such as the cancellation of S Tel’s 2G licence, or a failure by Siva to secure debt financing, would ensure that Siva bought back the shares acquired by BMIC at the price originally paid. BMIC and the defendants entered into a binding settlement agreement under this commitment, which contained a promise by Mr. Sivasankaran and Siva Limited to make payment to BMIC in agreed circumstances. The defendants failed to comply with their obligations under the settlement agreement. BMIC subsequently commenced proceedings against the defendants in the English High Court.
Given the lack of certainty around the timing and amount recoverable from S Tel, Fitch has conservatively not reflected any potential benefit from these developments in Batelco’s ratings.
Bashar Al Natoor