Cox & Kings declines 5% on default on another CP
The company defaulted Rs 50 crore in repayment commitments toward outstanding commercial papers (CP)
Shares of Cox & Kings hit lower circuit of 5 per cent in early trade on Tuesday after the travel-services company defaulted Rs 50 crore in repayment commitments toward outstanding commercial papers (CP), a short-term debt instrument, citing a temporary mismatch in cash flows.
The scrip slipped nearly 5 per cent to Rs 32.95, while the benchmark BSE Sensex was down 17 points at 39,669 at around 9.30 am (IST).
“The working capital situation at Cox & Kings (was) stretched in the past few months and was further affected due to its inability to replace the short term loans with long-term loans/regular working capital lines," the company told stock exchanges late on Monday.
The company is taking all the required measures to resolve the temporary cashflow mismatch, it added.
Cox and Kings is also evaluating each business and identifying ways to improve operational performance. It plans to reach out to lenders, seeking revision in loan repayment terms.
“The company will also be approaching its lenders to work out some time-bound program to meet this emergency," it said.
Earlier last week, rating companies cut the company's creditworthiness to 'D' or default.
Several acquisitions in the past seven-eight years have stretched the company’s balance sheet, an ET analysis showed.
Brokerage firm ICICIdirect last week suspended the coverage of the stock and adviced investors to exit their position after the company defaulted on the redemption of Rs 200 crore worth of its commercial papers citing cash flow mismatch issues.
“This comes as a big negative surprise as the company at the end of FY19 was sitting with cash in excess of Rs 1800 crore on its books with no concerns shown by the management with respect to cash flow mismatch. The amount of Rs 200 crore was liable to be repaid to two investors, out of which the company has repaid only Rs 50 crore. Further, the company said that the balance payment would be made from internal accruals when the cashflow position improves,” ICICIdirect said in a report on June 28.
The scrip slipped nearly 5 per cent to Rs 32.95, while the benchmark BSE Sensex was down 17 points at 39,669 at around 9.30 am (IST).
“The working capital situation at Cox & Kings (was) stretched in the past few months and was further affected due to its inability to replace the short term loans with long-term loans/regular working capital lines," the company told stock exchanges late on Monday.
The company is taking all the required measures to resolve the temporary cashflow mismatch, it added.
Cox and Kings is also evaluating each business and identifying ways to improve operational performance. It plans to reach out to lenders, seeking revision in loan repayment terms.
“The company will also be approaching its lenders to work out some time-bound program to meet this emergency," it said.
Earlier last week, rating companies cut the company's creditworthiness to 'D' or default.
Several acquisitions in the past seven-eight years have stretched the company’s balance sheet, an ET analysis showed.
Brokerage firm ICICIdirect last week suspended the coverage of the stock and adviced investors to exit their position after the company defaulted on the redemption of Rs 200 crore worth of its commercial papers citing cash flow mismatch issues.
“This comes as a big negative surprise as the company at the end of FY19 was sitting with cash in excess of Rs 1800 crore on its books with no concerns shown by the management with respect to cash flow mismatch. The amount of Rs 200 crore was liable to be repaid to two investors, out of which the company has repaid only Rs 50 crore. Further, the company said that the balance payment would be made from internal accruals when the cashflow position improves,” ICICIdirect said in a report on June 28.