Zenith Computers India Bond Issue

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Mumbai based IT and software services firm Zenith Infotech has moved Supreme Court against a recent Bombay High Court order asking it to share details of valuation of its cloud computing business. Earlier the Bombay High Court while hearing the case had stayed Zenith Infotech from undertaking any fresh state sales in the company without the court’s approval. 

The Bombay High Court in February this year had restrained Zenith from selling or transferring its cloud computing business after the company’s foreign currency convertible bond  holders took it to court over alleged willful default on FCCB payments worth $90 million due last year. The company’s bond holders had  also accused it of not sharing details of the sales of its US subsidiary, Zenith RMM to Summit Partners –  a US – based PE firm. The stake sale had happened just before the FCCB maturity dates.

Hearing the case the Bombay High Court has barred the company from undertaking any fresh stake sale or any of its business arms and ordered an independent valuation of the company’s remaining businesses. According to Ernst & Young (E&Y) the court appointed valuer, the cloud computing business is worth over $598 crore. 

Following an order from Bombay High Court, Zenith has disclosed that it had received $54 million in cash for Zenith RMM arm stake sale. Zenith RMM with summit partners holding the rest. In an affidavit field before the court, Zenith also revealed that it transferred about $15 million from the proceeds to Vu Technologies, a company run by Devita Saraf, the daughter of Raj Saraf and sister of Akash Saraf (Promoters of Zenith Computers and Zenith Infotech respectively). Zenith creditors allege Zenith is yet to account for Rs 150 crore that the company had on its balance sheet before the FCCB maturity, but still failed to clear its FCCB dues.

Following an order from Bombay High Court, Zenith has disclosed that it had received $54 million in cash for Zenith RMM arm stake sale. Zenith RMM with summit partners holding the rest. In an affidavit field before the court, Zenith also revealed that it transferred about $15 million from the proceeds to Vu Technologies, a company run by Devita Saraf, the daughter of Raj Saraf and sister of Akash Saraf (Promoters of Zenith Computers and Zenith Infotech respectively). Zenith creditors allege Zenith is yet to account for Rs 150 crore that the company had on its balance sheet before the FCCB maturity, but still failed to clear its FCCB dues.

Meanwhile, SBI (State Bank of India) has filed a winding-up petition against Zenith Computers for default on $20 million.

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