Zenith Infotech sued by bondholders over defaults

Zenith Infotech bondholders have sued the IT services provider over defaults of foreign currency convertible bonds (FCCBs) -- one for USD 33 million which was due on September 21, 2011, and a second tranche of USD 50 million, which was due for repayment or conversion in August 2012.

The bondholders have filed a petition against the company in Bombay High Court. The petition is against the company, its promoters, all subsidiaries and private equity (PE) investor Summit Partners. They have claimed a default of USD 85 million owing to cross default trigger.
The bondholders, led by hedge fund QVT, have demanded disclosure of Zenith RMM stake sale to the PE investor.
The case will be heard in vacation court on October 26.
In September 2011, Zenith Infotech had informed stock exchanges that it had spun off the division by way of an asset purchase agreement to Zenith RMM.
US-based Summit Partners announced an investment in Zenith RMM two days later, on September 28, for an undisclosed stake. The quantum of investment was also not disclosed.