Israeli spyware firm behind Pegasus phone-hacking scandal going broke
Israeli tech firm NSO Group is facing a $500 million default after being blacklisted in the US over its Pegasus phone-hacking technology that was allegedly used to spy on political dissidents, journalists, and rights activists.
Moody’s slashed NSO’s credit rating on Monday, putting it eight levels below investment grade.
The US rating agency explained that the company is at increased risk of violating the terms of its debt agreements, Bloomberg reported.
This comes after the spyware firm was added to a US trade blacklist following accusations that its military-grade Pegasus technology, aimed at preventing crime and terrorism, has instead been used by some of its clients to spy on human rights activists, journalists, and political dissidents.
NSO has repeatedly denied these claims, stressing that it has terminated a number of contracts “with government agencies that misused our products.”
The new export restrictions from Washington, added around three weeks ago, ban all dealings with the Israeli firm.
NSO reported negative cash flow last year, after being valued at about $1 billion following a management buyout in 2019. Moody’s analysts say the current decline in revenue and the distribution to shareholders may continue to drain the company for the rest of the year.
Moody’s estimates that NSO’s debt will exceed its earnings by nearly 6.5 times this year, while S&P Global Ratings puts the firm at B-, which means it still likely has the capacity to meet its financial obligations, but is highly vulnerable to adverse economic conditions.
NSO had around $29 million of unrestricted cash as of June, and drained its $30 million bank credit line.
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