Care Ratings lowered Fortis ratings on loans worth Rs 853 crore citing concerns over liquidity position after a disclosure by the company about advances extended to the Singh brothers.
Fortis Healthcare got a second downgrade of its loans within a week, this time from Care Ratings, which lowered ratings on borrowings worth Rs 853 crore.
The rating agency cited concerns over liquidity position after a disclosure by the company about advances extended to promoters, specifically the Singh brothers.
The loans included Rs 53 crore loans of Fortis Healthcare's subsidiary Escorts Heart Institute and Research Centre.
“The revision in ratings assigned to the bank facilities and short-term instruments of Fortis Healthcare Ltd (FHL) takes into account the impact on FHL’s liquidity profile given the disclosure made by the company on significant advances extended to related parties,” Care said in a statement.
This was the second downgrade of Fortis' debt within a week. Earlier, ICRA downgraded Fortis loans worth Rs 1,170 crore on similar grounds.
Care further said the revision in ratings also factors in inordinate delays in publication of FHL’s results for the quarter ending September 30, 2017 and December 31, 2017.Care added that the ratings of the loans continue to be on credit watch in view of the sizable reduction in the stake of promoter Fortis Healthcare Holdings Pvt Ltd (FHHPL) in Fortis Healthcare over the past year.
FHHPL is the promoter holding company for Fortis Healthcare.
“The liquidity profile of holding companies is stretched and with significant portion of promoter’s shareholding in Fortis Healthcare already being pledged, the ability of these companies to raise additional debt is affected, leading to higher reliance on refinancing and stake sales,” Care said.
The promoter’s stake in Fortis Hospitals has fallen from 70.28 percent as on September 30, 2016 to 34.43 percent as on December 31, 2017.
The rating revision also took note of the group’s efforts to dilute stake in subsidiaries, including Fortis Healthcare, and sell some other non-core assets intended to reduce debt level at the holding company level.
The rating agency said it is also closely watching the announcement by Fortis Healthcare to acquire the entire hospital business from RHT Health Trust (RHT) for estimated consideration of Rs 4,650 crore.
Care said the ratings continue to be on watch with negative implications and the agency is closely monitoring the developments for further rating action.Shares of Fortis Healthcare rose 2.30 percent to close at 142.50 on BSE, while the benchmark Sensex declined 0.42 percent to end 34,155.95 points.