Cox & Kings' ₹1.5 billion default has wiped out ₹720 million of shareholder wealth

• Cox & Kings declared on Thursday that it has defaulted on payments worth ₹1.5 billion.
• It had owed as much as ₹2 billion to two investors for its short-term unsecured debt.
• Two agencies, Brickwork Ratings and CARE Ratings downgraded the company within the span of a week.

Tour operator Cox & Kings declared on Thursday that it has defaulted on payments worth ₹1.5 billion, even as it has repaid as much as ₹500 million.

It had owed as much as ₹2 billion to two investors for its short-term unsecured debt. After the announcement late last night, the stock touched lower circuit at ₹36, and is down by 10% in early morning trade.

Cox & Kings had blamed rating downgrades for exacerbating the situation. It becomes tougher for a company to raise further money in the market after rating downgrades.

Two agencies, Brickwork Ratings and CARE Ratings downgraded the company within the span of a week. This sent the stock on a downward spiral, stressing the troubled company further.

“We wish to state that the company has been meeting its liability obligations. However, due to a cash flow mismatch and a situation exacerbated by rating downgrade, the company proposes to meet its financial obligations through a combination of internal accruals and monetization of assets,” Cox & Kings said.

The company also promised that it is working towards plans to make good of its financial obligations.

High debt has been troubling the company in the last few years, and it has downsized operations too to pare debt, according to reports. Last year, it sold its education tour business in Europe for ₹43.8 billion, to bring its debt down. However, it will have monetise more assets to stay afloat.