http://capitalmind.in/2015/09/zee-promoter-company-borrows-2200-cr-has-no-cash-flows-negative-net-worth-rated-a-on-shares-pledged-and-franklin-templeton-mf-owns-800-cr-of-that-debt/
So how is the rating agency providing a rating of “A+” On it? (suffixed with SO, meaning structured obligation). Thisis like the third highest rating that signifies “adequate degree of safety regarding timely servicing of financial obligations”. But how? The company itself owns very few shares, it has nearly no operational cash flows, and is loss making and has negative net worth. The rating is ENTIRELY based on the valuation of Zee and DTIL shares. What if they crash like Amtek Auto tomorrow?
There is no corporate guarantee by the Zee and Dish TV companies themselves, only a promise of further shares to be placed on pledges. But if these shares tank, that is a massive amount of debt that depends on those very share prices!
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