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Infotech has defaulted
on $33 million in foreign currency convertible
bonds, and the default has apparently triggered remaining bonds to come due for
a total of $85 million, according to the Times of India.

One of the bondholders, New York-based QVT Financial, told
the Times that the default means the other bonds are accelerated for immediate

Zenith Infotech confirmed the default and issued a statement
to partners and customers stating that the company is financially sound and
that it is working to renegotiate the bonds. The company did not explain the
strategy behind defaulting on its bonds if it is financially sound. Zenith
Infotech then shut down any other statements.

Meanwhile, Zenith RMM, spun off by Zenith Infotech in a sale
to Summit Partners in a deal announced on Sept. 28, distanced itself from
Zenith Infotech, sending a note to partners that backup and disaster recovery,
advanced recovery and continuity appliance, Smartstyle and MirrorCloud products
were still part of Zenith Infotech, not Zenith RMM, and that any issues with
these products should be communicated to a Zenith Infotech Account Manager.

Summit Partners investment in Zenith RMM remains
undisclosed. And while Zenith Infotech retains a "major" stake in
Zenith RMM, and Zenith Infotech’s CEO sits on Zenith RMM’s Board, the stake is
also undisclosed.

The Times reports that Zenith Infotech said it had received
all the money due from the Zenith RMM sale except for the amount to be held in
escrow, part of which the company plans to use for partial repayment of FCCBs.

QVT and a few other shareholders have reportedly filed suit
against Zenith Infotech seeking to stop the sale of assets and seeking to learn
the details of the Zenith RMM deal structure and the value of the transaction.