Credit rating agency Moody's has downgraded Israeli spyware firm NSO Group by two levels to Caa2, eight levels below investment grade, and warned that the company is at a growing risk of default with $500 million of debt following exceptionally harsh cash flow problems.
Moody's said that if creditors insist on NSO paying its debts then there would be a real threat to its continued existence. Moody's said that in June NSO only had $29 million in free cash after fully drawing on its $30 million banking credit line.
Only two years ago NSO was valued at $1 billion. But today the company is fighting charges that its Pegasus spyware, which breaches mobile phones, is used by governments to track politicians, journalists and human rights activists. NSO denies the charges and says that its spyware helps governments prevent terrorism and crime.
Despite this the US Department of Commerce blacklisted the company and said that it was working against US national defense and overseas interests. This move limits new exports by NSO, which will only make it more difficult for the company to recover financially.
Last year even before the US blacklisting and the comprehensive report on it by Amnesty and Forbidden Stories, NSO reported negative cash flow and a fall in profits. Moody's said that the difficulties have only worsened over the past year and there is an expected slowdown in sales following the new US restrictions.
Published by Globes, Israel business news - en.globes.co.il - on November 23, 2021.
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