/raid1/www/Hosts/bankrupt/TCRAP_Public/110214.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, February 14, 2011, Vol. 14, No. 31
Headlines
A U S T R A L I A
GRIFFIN COAL: Administrators Update Noteholders on Company Status
INDOPHIL RESOURCES: Won't Extend SMC's "Exclusive Review Period"
C H I N A
CHINA PROPERTIES: Moody's Withdraws 'Caa1' Corp. Family Rating
RENHE COMMERCIAL: S&P Gives Negative Outlook; Affirms 'BB' Rating
H O N G K O N G
BONAR FLOORS: Middleton and Power Step Down as Liquidators
CLIPSAL INDUSTRIES: Kong Chi How Johnson Appointed as Liquidator
ELITE WIN: Court Enters Wind-Up Order
EMERALD INNOVATIONS: Seng and Lo Step Down as Liquidators
FAIRGO INTERNATIONAL: Creditors' Proofs of Debt Due March 15
I N D I A
AIR INDIA: Delays Disbursement of January Salary
AIR INDIA: Under-Reported Losses in 2009-10, CAG Says
ANMOL STEEL: ICRA Reaffirms 'LBB+' Rating on INR5cr Bank Loans
BANK OF INDIA: Moody's Assigns Rating to Proposed Senior Notes
BENGANI FOOD: ICRA Assigns 'LBB' Rating to INR20cr Bank Limits
BHOGI AGRO: CRISIL Reaffirms 'BB' Rating on INR100MM Cash Credit
CHADALAVADA INFRATECH: CRISIL Cuts Rating on Cash Credit to 'BB'
DALI & SAMIR: ICRA Assigns 'LBB+' Rating to INR3.6cr Term Loan
EAST INDIA: CRISIL Reaffirms 'B+' Rating on INR56.4MM Term Loan
FRUITFUL BUILDCON: ICRA Assigns 'LBB' Rating to INR54cr Loan
INDIGO METALLOYS: CRISIL Assigns 'B' Rating to INR21MM Cash Credit
JAWANDAMAL DHANNAMAL: ICRA Reaffirms 'LBB+' Rating on LT Loan
JAYESH OIL: CRISIL Reaffirms 'BB' Rating on INR20MM Cash Credit
KAN FOODS: CRISIL Assigns 'BB-' Rating to INR16.9MM Term Loan
MARTOPEARL ALLOYS: CRISIL Assigns 'BB-' Rating to Cash Credit
MYK SPINNING: ICRA Reaffirms 'LBB+' Rating on INR5.2cr Term Loan
ROLEX RINGS: CRISIL Downgrades Rating on INR2.3BB Term Loan to 'D'
SHIVAJI ROLLER: CRISIL Reaffirms 'B+' Rating on INR50M Cash Credit
SHREE GIRIRAJ: CRISIL Upgrades Rating on Cash Credit to 'B+'
SKS TEXTILES: ICRA Reaffirms 'LBB+' Rating on INR6.35cr Term Loan
TUNGABHADRA POWER: CRISIL Rates INR415 Million LT Loans at 'D'
UNITEX INT'L: ICRA Reaffirms 'LD' Rating on INR13.5cr Term Loan
VACCU PLAST: CRISIL Assigns 'B+' Rating to INR45 Million Term Loan
VARUNA SPINNING: CRISIL Cuts Rating on INR60.4MM Term Loan to 'D'
J A P A N
* Moody's Assigns Ratings on Regional Financial Institutions' CLOs
K O R E A
KUMHO ASIANA: Aims to Exit Debt Workout Program This Year
KUMHO ASIANA: Asiana Airline Swings to KRW236 Billion in 2010
KUMHO ASIANA: To Sell 24.7% in Daewoo Eng'g. to Foreign Investors
N E W Z E A L A N D
CRAFAR FARMS: Trial on Fonterra Shares Case Moved Until Next Year
HANOVER FINANCE: Accuses Allied of Eroding Shareholder Value
P H I L I P P I N E S
BENGUET CORP: Accumulated Losses Narrow to PHP2.1 Billion
S I N G A P O R E
ESLONG TRADING: Court to Hear Wind-Up Petition on February 18
HEALTHCARE SUPPLY: Court Enters Wind-Up Order
INVESTMON SINGAPORE: Creditors' Proofs of Debt Due March 10
SINO-ENVIRONMENT TECHNOLOGY: Creditors' Meeting Set for Feb. 25
SINO-ENVIRONMENT TECHNOLOGY: Creditors' Proofs of Debt Due Feb. 23
V I E T N A M
HOANG ANH: Fitch Assigns 'B' Long-Term Issuer Default Rating
X X X X X X X X
* Moody's: Defaults and Recoveries Underscore Severity of Crisis
* Moody's: Global Default Rate Falls to 2.8% in January
- - - - -
=================
A U S T R A L I A
=================
GRIFFIN COAL: Administrators Update Noteholders on Company Status
-----------------------------------------------------------------
The voluntary administrators of Griffin Coal Mining Company Pty
Ltd recently invited holders of the 9-1/2% Senior Notes due 2016
to attend presentations on Griffin Coal in New York and Hong Kong
at 10:30 a.m. (New York time) on February 7, 2011, and 10:30 a.m.
(Hong Kong time) on February 10, 2011, respectively.
During the Presentations, two of Griffin Coal's administrators,
Brian McMaster and Scott Kershaw, gave an update in relation to
the financial and operational performance of Griffin Coal and
certain related entities and the status of the voluntary
administration. Representatives of UBS, investment bankers
engaged by the administrators, also presented.
Copies of the Presentations will be uploaded to Intralinks shortly
after the Hong Kong Presentation for the benefit of existing
Noteholders. The administrators will grant Intralinks access to
any prospective purchaser of the Notes, provided that such a
prospective purchaser can prove to the administrators' reasonable
satisfaction that it is a bona fide prospective purchaser.
The Presentations may contain material non-public information.
Any Noteholder or prospective purchaser of the Notes that is
concerned about receiving material non-public information should
consider obtaining independent legal advice in relation to the
Presentations and the use of the Intralinks site before accessing
Intralinks or reviewing the Presentations.
Questions with respect of the Intralinks site may be directed to
Julian Derrick of KordaMentha via email at
CMCNoteholders@kordamentha.com. Noteholders wishing to register
for access to Intralinks should forward their contact details via
this email address.
About Griffin Coal
Based in Australia, The Griffin Coal Mining Company Pty Ltd --
http://www.griffincoal.com.au/-- is engaged in coal mining and
processing. Griffin Coal operates major mines in the Collie area,
approximately 220 kilometers south east of Perth. The Company is
producing more than three million tons of coal per year. Griffin
Coal has operations at Ewington Mine, Muja Mine and Buckingham
Mine.
* * *
As reported by the Troubled Company Reporter-Asia Pacific on
January 4, 2010, Bloomberg News said Griffin Coal Mining Co.
appointed Kordamentha as administrator with total debts amounting
to AU$700 million. The coal supplier defaulted on an interest
payment in December 2009 to bondholders owed US$475 million and
also missed a payment to Australia's tax authority.
INDOPHIL RESOURCES: Won't Extend SMC's "Exclusive Review Period"
----------------------------------------------------------------
http://www.indophil.com/pdf/03%20-%20IRN%20ASX%2011_02_10.pdf
(Matet)
Indophil Resources NL said it would no longer extend the exclusive
review period for San Miguel Corp., which is eyeing to increase
its stake in the mining firm.
Indophil chief executive officer Richard Laufmann said in
statement "the company deemed that it was no longer in the best
interests of the relevant parties and Indophil's shareholders to
pursue a further extension of an exclusivity review period. The
exclusivity agreement had been in place for four months -- since
October 8, 2010 and expires on February 10."
"Indophil has developed a sound relationship with San Miguel, and
we maintain an ongoing dialogue with San Miguel as it continues
with its due diligence process. San Miguel is an impressive
organization with strong vision and leadership," Mr. Lauffman
said.
"Ending the exclusivity arrangement with San Miguel does not close
out San Miguel's right to make a control proposal to Indophil or
engage in a strategic relationship, but this decision does allow
Indophil to pursue its options," Mr. Lauffman noted.
Mr. Lauffman said, "Indophil will not rule out sale or partnership
possibilities, but we reserve the option to focus on the genuine
prospect of continuing to participate vigorously and directly in
the development of the Tampakan asset."
"Given the considerable progress at Tampakan, we believe it is
appropriate to allow the market to unlock the added value that is
traditionally derived during advanced project development. This in
turn leads to a significantly higher return to shareholders as a
company is re-rated," Mr. Laufmann added.
Mr. Lauffman said that Indophil has long observed that the global
reality of copper demand, steadily outpacing supply, cannot be
argued.
"Commodities are being revalued for sound fundamental reasons.
This has seen a sustained upward re-rating of the resource sector.
By any measure, an ongoing investment in Tampakan is compelling,"
Mr. Laufmann added.
As reported in the Troubled Company Reporter-Asia Pacific on
Jan. 10, 2011, The Australian said Indophil Resources NL has
agreed to extend by a month the due diligence that San Miguel
Corp. is conducting on the Australian mining company. San Miguel
completed in October last year its acquisition of a 10.1% stake in
Indophil for US$41.29 million. The share placement agreement also
gave San Miguel an exclusive right to conduct due diligence and
decide whether it should initiate a tender offer to acquire
additional shares in Indophil, The Australian added.
Indophil Resources has a 37.5% stake in the Tampakan copper-gold
project in South Cotabato, Philippines, while Xstrata Copper, the
world's fourth largest copper producer, holds the remaining 62.5%.
The Tampakan mine is considered Southeast Asia's largest
undeveloped copper-gold prospect. It is estimated to contain 13.5
million tons of copper and 15.8 million ounces of gold, at a grade
of 0.6% copper and 0.2 grams per ton of gold.
About Indophil Resources
Headquartered in Melbourne, Australia, Indophil Resources NL
-- http://www.indophil.com/-- conducts exploration and
development of gold and copper-gold opportunities in South East
Asia. The Company is a joint venture partner in the Tampakan
Copper-Gold Project in the Southern Philippines. The two segments
of the Company are Australia and the Philippines. The Company has
other exploration interests in the Philippines apart from the
Tampakan project.
* * *
Indophil Resources NL reported three consecutive net losses of
$10.58 million, $14.84 million and $985,107 for the years ended
Dec. 31, 2009, 2008 and 2007, respectively.
=========
C H I N A
=========
CHINA PROPERTIES: Moody's Withdraws 'Caa1' Corp. Family Rating
--------------------------------------------------------------
Moody's Investors Service has withdrawn China Properties Group's
Limited's Caa1 corporate family rating and debt rating on its
9.125% senior unsecured notes due May 2014.
Ratings Rationale
The credit ratings have been withdrawn because Moody's Investors
Service believes it has insufficient or otherwise inadequate
information to support the maintenance of the credit ratings.
The last rating action with respect to China Properties was taken
on 5 March 2009 when Moody's downgraded the corporate family
rating and senior unsecured debt rating to Caa1 with a negative
outlook. The action was triggered by uncertainty over the
refinancing of its RMB520 million bilateral bank loan and weaker-
than-expected sales.
Incorporated in Grand Cayman, China Properties Group Limited was
listed on the Hong Kong Stock Exchange in February 2007, and is
engaged in property investment and development in China.
RENHE COMMERCIAL: S&P Gives Negative Outlook; Affirms 'BB' Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it had revised the
rating outlook on China-based underground shopping mall developer
and operator Renhe Commercial Holdings Co. Ltd. to negative from
stable. At the same time, S&P affirmed the 'BB' long-term
corporate credit rating on the company and the 'BB' issue rating
on its outstanding senior unsecured notes.
"S&P revised the outlook to reflect its view that Renhe has an
increasing tolerance for debt-funded expansion and may deviate
from its original low-cost development strategy. In S&P's
opinion, the deviation could put the company's operating margin
under pressure. Renhe's aggressive risk and debt appetites are
higher than S&P's expectation, and are likely to cause its credit
metrics to weaken faster than S&P expected, should its property
sales slow down," said Standard & Poor's credit analyst Frank Lu.
S&P expects the company to significantly increase its debts in
2011. The company has issued US$900 million of notes since May
2010, and has large cash balances. S&P also believes Renhe's
aggressive debt appetite is not consistent with its intention of
continuing to pay a dividend of at least 30% of net income during
its fast-growth stage. S&P expects the company's leverage to rise
in 2011, such that its adjusted debt-to-EBITDA ratio increases to
about 2.0x. S&P estimates the ratio to be about 1.5x as of Dec.
31, 2010, taking into account net gains from the sale of five
project companies.
In S&P's view, Renhe's reliance on the sale of whole project
companies, instead of selling properties directly to customers,
has increased sales concentration and counterparty risk in
relation to sales receivables. Sales of project companies
comprised about 80% of total property sales in terms of gross
floor area in 2010.
Renhe's recent acquisition of a shopping complex project in Wuxi
for Chinese renminbi (RMB)2.6 billion in equity may signal a
change in the company's low-cost development strategy, in S&P's
opinion. The company will acquire above-ground properties to gain
access to build underground civil air defense shelters for
commercial purposes. It earlier focused on the latter, which
command very high margins because, according to current
regulations in China, no land premium needs to be paid. Renhe's
margins could come under pressure if it continues to pursue the
new strategy.
"The rating on Renhe reflects the high regulatory risks, the
company's low recurring income, and its short track record as a
publicly listed company. In addition, S&P believes Renhe's
financial risk management is under-tested and its growth plan is
ambitious, comprising mostly greenfield development projects. The
prime location of Renhe's existing and potential projects, the
company's high profitability, good credit ratios, and the high
growth potential stemming from its exposure to growing Chinese
consumerism temper these weaknesses," said Mr. Lu.
In S&P's view, Renhe's liquidity is adequate. As at Dec. 31,
2010, the group had an unrestrictive cash balance of about
RMB7 billion and no short-term debt due. S&P expects Renhe's
discretionary cash flow to be negative in the next two years due
to its aggressive expansion and high dividends. S&P anticipates
that the company will fund the shortfall with its cash balance and
debt proceeds. In addition, S&P believes the company's access to
domestic banking facilities remains very limited.
The company provided guarantees of about RMB1.13 billion to banks
for buyers' mortgage loans as at Dec. 31, 2010. In S&P's
analysis, S&P treat 20% of the net guarantee (gross guarantee
minus restrictive bank deposits for the guarantee) as debt. This
represents the amount that the company is likely to pay for the
guarantee if buyers default, after taking into consideration a 30%
down payment from buyers and a potential 50% drop in property
values. These mortgage loans are related to the purchase of
operating rights for Renhe's shopping units and typically last
five years.
S&P may lower the rating if the company expands into other areas
that are not related to its core business, or if changes in
regulations significantly undermine its business model,
profitability, and cash flow. S&P could also lower the rating if
Renhe's expansion is overly aggressive, and the company incurs
more debt to fund its expansion, such that its credit ratios
deteriorate. For example, its ratio of adjusted debt to EBITDA
increases to more than 3x. The rating could also be under
pressure if the company fails to maintain a minimum cash balance
at its target level of about RMB4 billion.
S&P could revise the outlook to stable if the company demonstrates
disciplined and consistent financial risk management, and
maintains its credit metrics appropriate for a 'BB' rating despite
its aggressive growth and debt-funded expansion.
================
H O N G K O N G
================
BONAR FLOORS: Middleton and Power Step Down as Liquidators
----------------------------------------------------------
Edward Simon Middleton and Fergal Thomas Power stepped down as
liquidators of Bonar Floors Limited on January 31, 2011.
CLIPSAL INDUSTRIES: Kong Chi How Johnson Appointed as Liquidator
----------------------------------------------------------------
Kong Chi How Johnson on January 31, 2011, was appointed as
liquidator of Clipsal Industries Hong Kong Limited.
The liquidator may be reached at:
Kong Chi How Johnson
25th Floor, Wing On Centre
111 Connaught Road
Central, Hong Kong
ELITE WIN: Court Enters Wind-Up Order
-------------------------------------
The High Court of Hong Kong entered an order January 31, 2011, to
wind up the operations of Elite Win Investment Limited.
The company's liquidators are:
Mr. Ying Hing Chiu
Ms. Chan Mi Har
Level 28, Three Pacific Place
1 Queen's Road East
Hong Kong
EMERALD INNOVATIONS: Seng and Lo Step Down as Liquidators
---------------------------------------------------------
Natalia K M Seng and Susan Y H Lo stepped down as liquidators of
Emerald Innovations Limited on February 11, 2011.
FAIRGO INTERNATIONAL: Creditors' Proofs of Debt Due March 15
------------------------------------------------------------
Creditors of Fairgo International Limited, which is in members'
voluntary liquidation, are required to file their proofs of debt
by March 15, 2011, to be included in the company's dividend
distribution.
The company commenced wind-up proceedings on January 31, 2011.
The company's liquidator is:
Chan Kin Sun
Flat H, 10/F,
Siu Wah Building
116-122 Tsat Tsz Mui Road
North Point
Hong Kong
=========
I N D I A
=========
AIR INDIA: Delays Disbursement of January Salary
------------------------------------------------
The Press Trust of India reports that Air India has delayed for
the second time payment of salary to its 30,000 employees for the
month of January.
According to the news agency, the national carrier, which had
earlier said that the salaries would be disbursed on February 10,
now said that they will be paid today, February 14.
PTI relates airline officials said that the delay was due to the
critical financial position.
A January 31 notification had said that due to "critical financial
position" it has been decided to delay the salary disbursement for
the month of January 2011 to February 10, PTI reports.
PTI says Air India employees used to get their salary on the last
day of the month but after facing financial crisis the airline
management decided to disburse the salary on the 7th of every
month. The airline's salary bill is to the tune of INR31,000
crore per annum, PTI discloses.
About Air India
Air India -- http://www.airindia.com/-- transports passengers
throughout India and to more than 40 destinations throughout the
world. Affiliate Air India Express operates as a low-fare
carrier, mainly between India and destinations in the Middle East,
and Air India Cargo provides freight transportation. The
government of India has merged Air India with another state-
controlled carrier, Indian Airlines, which has focused on domestic
routes. The combined airline, part of a new holding company
called National Aviation Company of India, uses the Air India
brand. The new Air India and its affiliates have a fleet of more
than 110 aircraft altogether.
* * *
The Troubled Company Reporter-Asia Pacific, citing the Hindustan
Times, reported on June 19, 2009, that Air India has been bleeding
cash due to excess capacity, lower yield, a drop in passenger
numbers, an increase in fuel prices and the effects of the global
slowdown. The carrier incurred net losses of INR2,226.16 crore in
2007-08 and INR5,548 crore in 2008-09. Air India is estimated to
have lost INR54 billion in the fiscal year ended March 31, 2010,
according to The Wall Street Journal.
The TCR-AP, citing livemint.com, reported on July 27, 2010, that
Air India unveiled a turnaround plan that envisages the airline
reaching operational break-even and wiping out the INR14,000 crore
of accumulated losses and INR18,000 crore of debt on its balance
sheet by 2014-15. The plan includes raising the company's fleet
strength to as many as 275 planes from 148 in five years. Air
India Chairman and Managing Director Arvind Jadhav said the new
100-page turnaround plan for 2010-14, which ruled out any job cuts
or wage reductions, was approved by the board and would be adopted
after incorporating suggestions by representatives of the
airline's 33,500 employees.
AIR INDIA: Under-Reported Losses in 2009-10, CAG Says
-----------------------------------------------------
The Press Trust of India reports that the Comptroller and Auditor
General (CAG) has found discrepancies in Air India's accounts
which show that the airline under-reported its losses in 2009-10
by over INR3,000 crore.
PTI relates sources said that according to an interim report of
the government audit body, the loss should have been INR8,589.1
crore, instead of INR5,551 crore as has been shown in the account
books.
According to the news agency, the national carrier, which is in
the process of responding to the queries raised by CAG, has stated
that the figure of losses was arrived at after accounting for
deferred tax assets (DTA) of INR2842.52 crore and not showing
INR195.58 crore as expenditure in the books as maintenance cost
for leased planes.
DTA is an asset on a company's balance sheet that may be used to
reduce income tax expense of any subsequent period, PTI notes.
"DTA is a standard accounting practice followed globally by all
airlines. DTA has to be treated like expenditure for accounting
purposes," an Air India spokesperson told PTI.
"The DTA pertains to the year 2008-09 and was created last year on
the grounds that Air India has a turnaround plan in place and it
would be possible to adjust the tax benefit on the losses in the
future years out of the profits available," the spokesperson said,
according to PTI.
Maintaining that there was "no understatement of loss" for the
year 2009-10, PTI relates, the spokesperson said "DTA as a
conservative measure was not created. If the same was created the
losses would have been much lower".
He further said that during 2009-10, there was an improvement of
39% in the operational performance of the company as compared to
2008-09 and there was scope for further improvement in 2010-11 due
to a series of measures to control costs, PTI reports.
According to PTI, the CAG had earlier questioned the airline's
decisions on ordering 111 new aircraft worth INR50,000 crore. It
had also raised questions on poor progress on the merger of the
two erstwhile state-owned carriers into Air India, PTI adds.
About Air India
Air India -- http://www.airindia.com/-- transports passengers
throughout India and to more than 40 destinations throughout the
world. Affiliate Air India Express operates as a low-fare
carrier, mainly between India and destinations in the Middle East,
and Air India Cargo provides freight transportation. The
government of India has merged Air India with another state-
controlled carrier, Indian Airlines, which has focused on domestic
routes. The combined airline, part of a new holding company
called National Aviation Company of India, uses the Air India
brand. The new Air India and its affiliates have a fleet of more
than 110 aircraft altogether.
* * *
The Troubled Company Reporter-Asia Pacific, citing the Hindustan
Times, reported on June 19, 2009, that Air India has been bleeding
cash due to excess capacity, lower yield, a drop in passenger
numbers, an increase in fuel prices and the effects of the global
slowdown. The carrier incurred net losses of INR2,226.16 crore in
2007-08 and INR5,548 crore in 2008-09. Air India is estimated to
have lost INR54 billion in the fiscal year ended March 31, 2010,
according to The Wall Street Journal.
The TCR-AP, citing livemint.com, reported on July 27, 2010, that
Air India unveiled a turnaround plan that envisages the airline
reaching operational break-even and wiping out the INR14,000 crore
of accumulated losses and INR18,000 crore of debt on its balance
sheet by 2014-15. The plan includes raising the company's fleet
strength to as many as 275 planes from 148 in five years. Air
India Chairman and Managing Director Arvind Jadhav said the new
100-page turnaround plan for 2010-14, which ruled out any job cuts
or wage reductions, was approved by the board and would be adopted
after incorporating suggestions by representatives of the
airline's 33,500 employees.
ANMOL STEEL: ICRA Reaffirms 'LBB+' Rating on INR5cr Bank Loans
--------------------------------------------------------------
ICRA has reaffirmed the long-term rating of 'LBB+' to the INR5.00
crore fund-based bank facilities of Anmol Steel Processors Private
Limited. The long-term rating has been assigned a 'stable'
outlook. ICRA has also reaffirmed the short-term rating of 'A4+'
to the INR35.00 crore non-fund based bank facilities of ASPPL.
The rating reaffirmations take into account the long track record
of the promoters in the steel processing and trading business; the
company's procurement efficiency based on an established
relationship with leading hot rolled (HR) coil suppliers and its
high asset turnover leading to a healthy, although declining,
return on capital employed. Nevertheless, the ratings are
constrained by the limited value addition in ASPPL's business and
a highly fragmented nature of the industry characterized by
intense competition, both of which result in thin operating and
net profitability; limited steel processing capacity of the
company at present which necessitates outsourcing of some
operations, leading to further pressure on its profit margins and
its depressed coverage indicators. ICRA also notes that
ASPPL is in the process of increasing its steel processing
capacity to 150,000 metric tonnes per annum (MTPA) in the near
term from existing 72,000 MTPA at an estimated cost of INR11.25
crore, which would be funded by a mix of term loan, unsecured
loans from promoters/group companies and internal accruals at a
project gearing of 4 times. While the proposed capital
expenditure is expected to enhance ASPPL's capacity and improve
its profitability, the same is likely to strain its capital
structure in the short-to-medium term.
About Anmol Steel
Established in 1994, ASPPL is engaged in processing and trading of
HR coils and has its HR coils cutter and de-coiler facility
located at Taloja in the Raigad district of Maharashtra. ASPPL
mainly procures HR coils from leading domestic HR coil suppliers.
The annual capacity of HR coil processing facility of the company
is 72,000 MT. In case of additional requirements from the
customers, the company also gets the HR coils processed from
companies which are in the same line of business and located close
to its facilities.
In 2009-10, ASPPL reported a profit after tax (PAT) of INR0.97
crore on the back of net sales of INR352.4 crore. As per the
provisional results for the period April-November 2010, ASPPL
reported net sales of INR204.1 crore.
BANK OF INDIA: Moody's Assigns Rating to Proposed Senior Notes
--------------------------------------------------------------
Moody's Investors Service has assigned a provisional (P)Baa2 long-
term foreign-currency rating to the Bank of India's proposed
senior unsecured notes under its US$2.0 billion medium-term note
programme issued through its foreign branches. The exact amount,
coupon and maturity of the issuance have yet to be decided. The
notes are expected to be listed on the Singapore stock exchange.
Ratings Rationale
Bank of India's Baa2 foreign-currency senior unsecured rating is
derived from its D+ bank financial strength rating, which maps to
a baseline credit assessment of Ba1, and Moody's assessment of a
very high probability of systemic support in the event of need.
The BFSR reflects the bank's significant market presence,
comfortable liquidity profile and adequate profitability.
However, Moody's notes that the rating is constrained by Bank of
India's high single-party exposure concentration to the Indian
government through government securities, similar to other Indian
banks. Bank of India, as a majority government-owned bank, enjoys
a very high probability of systemic support in Moody's view,
leading to a two notch uplift for the Baa2 long-term global local
currency deposit rating from the Ba1 BCA.
The bank's most recent (unaudited) results - for the nine months
ending December 2010 - point to a significant 52% year-on-year
increase in net profit to INR19.95 billion (US$440 million).
Moody's attributes the increase in net profitability to rising net
interest income backed by strong loan growth and significant
improvements in net interest margins. However, non-interest and
other income slightly declined over the same period. As the
Indian economy resumed its high growth momentum, Bank of India's
asset quality improved significantly during the first nine months
of FY2011, resulting in high recoveries and the upgrading of non-
performing loans. The ratio of NPLs to gross loans (gross NPL
ratio) declined to 2.36% at end-December 2010, from 2.67% in the
previous year, while the net NPL ratio fell to 0.88% from 1.03%
over the same period. Capitalization remained at good levels,
with the total capital adequacy ratio (Basel II) at 12.41% and the
Tier 1 ratio at 7.97% as of the end of December 2010, despite
declining from 13.64% and 9.38%, respectively at the end of 2009.
The last rating action on Bank of India was implemented on 27
January 2010, when Moody's downgraded the rating on its upper Tier
2 subordinated notes to Ba1 from Baa3 and confirmed the Ba2 rating
on the perpetual hybrid Tier 1 notes.
Bank of India, headquartered in Mumbai, had assets of INR2,992
billion (US$66.1 billion) as of the end of December 2010.
BENGANI FOOD: ICRA Assigns 'LBB' Rating to INR20cr Bank Limits
--------------------------------------------------------------
ICRA has assigned an 'LBB' rating to the INR20.00 crore fund based
bank limits of Bengani Food Products Private Limited. The outlook
on the long term rating is stable. ICRA has also assigned an 'A4'
rating to the INR8.00 crore non-fund based bank limits of BFPPL.
In arriving at the rating, ICRA has evaluated the business risk
profile of BFPPL on a consolidated basis along with Bengani
Exports (India) Private Limited (BEIPL, rated at LBB / stable and
A4 by ICRA), its group company, both of which are engaged in the
business of trading in maize and soya de-oiled cake (DOC). The
assigned ratings take into account the experience of the promoters
in trading of raw materials to the poultry feed industry, the
established relationship of the company with its clients and
suppliers and the economies of scale it enjoys due to bulk
procurement of materials. The working capital intensity of
operations is low and the risk of price volatility of traded
products is limited as a major portion of the sales is order
backed. The ratings are, however, constrained by the unfavorable
financial profile of the company characterized by low
profitability and depressed levels of coverage indicators and
exposure to exchange rate risk, as a significant portion of the
company's revenue is derived from exports. ICRA also notes the
high level of competition amongst existing players in the
business, which puts a downward pressure on profitability and the
operating loss incurred by the company in 2009-10. Almost the
entire sale of BFPPL is made to poultry feed manufacturers, who
are exposed to the industry risk of disease outbreaks, which in
turn makes BFPPL vulnerable to such risks.
About Bengani Food
Incorporated in February 1997, Bengani Food Products Pvt Ltd is
primarily engaged in the trading of maize and soya DOC. The
promoters of BFPPL have more than two decades of experience in the
same line of business. The company mainly caters to the poultry
feed manufacturers, both in the domestic and export market. The
company is registered with Federation of Indian Export
Organisations (FIEO) and also recognized as a 'Star Export House'
by the Government of India.
Recent Results
The company reported a net profit of INR0.64 crore in 2009-10 on
an operating income of INR307.52 crore; as compared to a net
profit of INR0.59 crore on an operating income of INR276.79 crore
during 2008-09.
BHOGI AGRO: CRISIL Reaffirms 'BB' Rating on INR100MM Cash Credit
----------------------------------------------------------------
CRISIL's ratings on the bank facilities of Bhogi Agro Traders Pvt
Ltd., continue to reflect the Jayesh group's low profitability,
owing to intense competition in the refined oil trading business,
and the susceptibility of its revenues to adverse changes in
government regulations. The ratings also factor in the group's
below-average financial risk profile, marked by weak total outside
liabilities to tangible net worth ratio, inadequate interest and
risk coverage ratios, and modest net worth. These weaknesses are
partially offset by the experience of the Jayesh group's promoters
in the edible oil industry and its established market position.
Facilities Ratings
---------- -------
INR100.0 Million Cash Credit BB/Stable (Reaffirmed)
INR50.0 Million Letter of Credit P4+ (Reaffirmed)
For arriving at its ratings, CRISIL has combined the business and
financial risk profiles of Bhogi and Jayesh Oil Trade Pvt Ltd
(Jayesh), together referred to as the Jayesh group. This is
because the two entities are in the same business, have
operational linkages, and are common promoters.
Outlook: Stable
CRISIL believes that the Jayesh group will continue to benefit
from its promoters' industry experience and its healthy
relationships with customers and refiners, over the medium term.
The outlook may be revised to 'Positive' if the group's net worth
increases, and its financial risk profile improves. Conversely,
the outlook may be revised to 'Negative' in case of significant
deterioration in the group's profitability or liquidity.
Update
The Jayesh group's operating income increased to INR5.1 billion in
2009-10 (refers to financial year, April 1 to March 31) from
INR2.4 billion in the previous year, primarily driven by increased
demand for palmolein oil amid lower domestic oil production, and
reduced import duty on crude palm oil and refined, bleached, and
deodorised (RBD) palmolein oil. The group has been able to
increase its turnover on the back of its strong relations with
suppliers and brokers, supported by adequate and timely
enhancement of its working capital lines by its lenders. Bhogi was
sanctioned a cash credit (CC) limit of INR100 million in
July 2009; it did not have a CC limit prior to this. The group
now enjoys a INR230-million CC limit and a INR130-million letter
of credit limit. To support Jayesh's working capital
requirements, the promoters infused INR20 million during the year;
INR65 million was infused by the promoters in the previous year.
The promoters have been infusing funds in order to meet the
requirements set by the bank for the sanction of increased bank
limits.
Historically, the operating margin of the Jayesh group,
considering the trading nature of its operations, has been low, at
less than 1 per cent. It reported an operating profit before
depreciation, interest, and tax margin of 0.8 per cent in 2009-10.
In the first half of 2010-11, the margin improved to 1.7 per cent
mainly because of rising palmolein prices during this period; the
group has taken a long forward position of about 20,000 tonnes of
palmolein oil amid rising prices. For the full year, CRISIL
believes that the margin will revert to the long-term mean of
around 1 per cent, as there could be some overheads booked at the
year-end closure of accounts.
The Jayesh group reported a profit after tax (PAT) of INR14
million on net sales of INR5.1 billion for 2009-10, against a PAT
of INR6.6 million on net sales of INR2.4 billion for 2008-09.
Bhogi, on a standalone basis, reported a PAT of INR7.6 million on
net sales of INR2.5 billion for 2009-10, against a PAT of INR3.2
million on net sales of INR696.1 million for 2008-09.
About the Group
The Jayesh group trades in RBD palmolein oil. The group is managed
by the Shethia family, which has been in this business for nearly
three decades. Jayesh sources RBD palmolein oil from established
refiners, such as Gokul Refoils & Solvent Ltd, Adani Willmar Ltd,
Bunge India Pvt Ltd, and Ruchi Soya Industries Ltd, and sells it
through a network of dealers and wholesalers.
CHADALAVADA INFRATECH: CRISIL Cuts Rating on Cash Credit to 'BB'
----------------------------------------------------------------
CRISIL has downgraded its ratings on Chadalavada Infratech Ltd.'
bank facilities to 'BB/Negative/P4+' from 'BBB/Stable/P3+'.
Facilities Ratings
---------- -------
INR150.0 Million Cash Credit BB/Negative (Downgraded from
'BBB/Stable')
INR1450.0 Million Bank Guarantee P4+ (Downgraded from 'P3+')
INR200.0 Million Letter of Credit P4+ (Downgraded from 'P3+')
The downward revision in ratings reflects CRISIL's concerns
arising from Chadalavada Infratech' stretched liquidity position,
reflected in frequent instances of LC devolvements &
irregularities in the cc account. The company has been facing
liquidity pressures, chiefly on account of reschedulement of
projects by key customers for which the company had opened LCs for
procuring of raw materials & postponement by counterparties
resulted in cash flow mismatches thereby arresting company's
ability to retire LCs on due date.
The rating continues to reflect risks relating to working capital
intensive nature of operations. However, these are partially
offset by the benefits which the company derives from its
established presence in power transmission industry and the
promoter's long experience and established relationships with
customers and suppliers.
Outlook: Negative
CRISIL's negative outlook reflects continued stretch in liquidity
of Chadalavada Infratech Ltd. caused due to cash flow mismatches,
thereby constraining the credit profile. The outlook may be
revised to 'stable' if the company is able to demonstrate
significant improvement in liquidity profile over medium term
through infusion of additional long-term funds & collection
efficiency. The rating may be downgraded in case of further
deterioration of liquidity position.
About Chadalavada Infratech
Chadalavada Infratech Ltd. (erstwhile Chadalavada Construction
Pvt. Ltd.) was incorporated in February 2000 and started as a
subcontractor to L&T. The company is engaged in Electrical
Transmission & Distribution Infrastructure Industry involving
Engineering, Procurement and Commissioning of sub-stations and
Electrical Transmission lines. The company undertakes activities
only for government. The promoters entered into this field in
1998 by setting up of proprietary concern.
Chadalavada Infratech reported a profit after tax (PAT) of INR75.4
million on net sales of INR1413.1 million for 2009-10 against a
net profit of INR61.3 million on net sales of INR1174.5 million
for 2008-09.
DALI & SAMIR: ICRA Assigns 'LBB+' Rating to INR3.6cr Term Loan
--------------------------------------------------------------
ICRA has assigned an 'LBB+' rating with stable outlook to the
INR3.60 crore Term Loan facility and INR12.40 crore Overdraft
facility of Dali & Samir Engineering Private Limited.
The assigned rating draws comfort from company's long established
relationship with TML as supplier of fuel tanks for commercial
vehicles (CV). While D&S's client concentration with TML is high,
the risks are mitigated to an extent by TML's strong market
position in CV business and the high share of business the company
enjoys for most components it supplies to TML. The company also
has plans of client diversification and revenue share from other
clients is expected to increase moving forward. The assigned
rating also takes into consideration long standing experience of
promoters in auto ancillary industry. The rating is however
constrained by stretched capital structure of the company
characterized by high gearing which is primarily on account of
debt funded capital expenditure in the recent past. The company
also remains susceptible to raw material price fluctuations as
evident in net losses incurred in FY09.
Dali & Samir Engineering Private Limited has been historically
engaged in manufacturing of fuel tanks and other sheet metal
components primarily for CVs of TML. The company has been in
relation with TML for last 38 years. All the promoters of the
company are well qualified and come from the same family. The
promoters have tight control over all operational, financial and
marketing related activities
of the company.
About Dali & Samir
D&S was established by Mr. M. C. Salian in 1972 and it has been
engaged in manufacturing of fuel tanks, other sheet metal
components and exhaust systems for automobile industry. The
company manufactures Fuel Tanks, Hydraulic Tanks, Vacuum Tanks,
Radiator Frames and other assemblies for trucks, MUVs, SUVs and
cars. Tata Motors Limited is the biggest client for D&S and it
contributes to majority of the revenues of the company since its
inception.
Recent Results
D&S has reported a profit after tax (PAT) of INR2.95 crore in FY10
on an operating income of INR45.03 crore.
EAST INDIA: CRISIL Reaffirms 'B+' Rating on INR56.4MM Term Loan
---------------------------------------------------------------
The ratings continue to reflect East India Holdings Pvt Ltd's weak
operating efficiencies with margins vulnerable to fluctuations in
raw material prices, and financial flexibility constrained by high
working capital requirements and debt-funded capital expenditure
(capex). These rating weaknesses are partially offset by EIHPL's
improving business risk profile, supported by recent capacity
additions.
Facilities Ratings
---------- -------
INR56.40 Million Term Loan B+/Stable (Reaffirmed)
INR100.00 Million Cash Credit B+/Stable (Reaffirmed)
INR5.9 Million Proposed LT B+/Stable (Reaffirmed)
Bank Loan Facility
INR37.7 Million Letter of Credit P4 (Reaffirmed)
Outlook: Stable
CRISIL believes that EIHPL's business profile will remain moderate
over the near to medium term supported by increase in scale of
operations due to recent capacity additions. The outlook may be
revised to 'Positive' if the company improves its financial risk
profile supported by higher-than-expected increase in cash
accruals or further equity infusion. Conversely, the outlook may
be revised to 'Negative' if EIHPL reports decline in cash accruals
because of lower-than-expected capacity utilization, or weakening
of capital structure because of additional debt-funded capex.
About East India Holdings
EIHPL, incorporated in 1999 by Mr. O P Agarwal, manufactures mild
steel ingots. The company commenced commercial production in July
2007, with an induction furnace with a capacity of 7 tonnes per
day. EIHPL's capacity has gradually increased, with the addition
of another furnace with a capacity of 8 tonnes per day in 2007-08
(refers to financial year, April 1 to March 31), two more furnaces
with capacities of 12 tonnes per day each in March 2009, and
concast facility for manufacturing billets.
EIHPL reported a profit after tax (PAT) of INR16 million on net
sales of INR1.66 billion for 2009-10 (refers to financial year,
April 1 to March 31), against a PAT of INR6.3 million on net sales
of INR769.7 million for 2008-09.
FRUITFUL BUILDCON: ICRA Assigns 'LBB' Rating to INR54cr Loan
-------------------------------------------------------------
ICRA has assigned an 'LBB' rating on the long-term scale to the
INR54 crore, term-loan programme of Fruitful Buildcon Private
Limited. The outlook on the rating is stable.
The rating is constrained by the execution risk associated with
the project; single-property concentration risk, resulting in
complete dependence of FBPL on the demand-supply scenario in the
Jaipur hospitality market; intensely competitive and seasonal
nature of the Jaipur hospitality market, resulting in modest
operating metrics of hotel companies in the city; and adverse
demand-supply outlook for premium hotels in Jaipur in the medium-
to-long term, which is expected to exert further pressure on the
operating metrics of the properties. While assigning the rating,
ICRA has also taken into cognizance the likelihood of cost
overruns that may strain project feasibility and require further
mobilization of funding. The rating, however, derives comfort
from the advantageous location of the project, with proximity to
key commercial and upscale areas of the city of Jaipur;
association of FBPL with the Hilton group, which provides access
to their global reservation systems besides imparting strong brand
recognition; satisfactory progress on the project to date and
moderate funding risk. The rating also factors in the favorable
maturity profile of the debt, with 18 months moratorium post-
SCOD, followed by ballooning repayment spread over a period of
seven years, which is expected to moderate the pressure on its
cash flows.
In ICRA's view, the key rating sensitivities are the ability of
FBPL to get the balance equity in a timely manner; implement the
project as per plans and also without cost or time overruns; and
command healthy average room revenues (ARRs) and occupancies to
maintain its profitability in view of significant room addition
expected in the region.
About Fruitful Buildcon
Incorporated in March 2001, FBPL is a closely-held company
constructing a 152-room five-star hotel property at Hawa Sadak in
Jaipur. The company has entered into management agreement with
Hilton International Manage LLC and will be using its full-service
upscale brand "Doubletree by Hilton" for the property, which is
scheduled to commence operations in March 2012.
INDIGO METALLOYS: CRISIL Assigns 'B' Rating to INR21MM Cash Credit
------------------------------------------------------------------
CRISIL has assigned its 'B/Stable/P4' ratings to the bank
facilities of Indigo Metalloys Pvt Ltd.
Facilities Ratings
---------- -------
INR21.0 Million Cash Credit B/Stable (Assigned)
INR95.0 Million Rupee Term Loan B/Stable (Assigned)
INR10.0 Million Bank Guarantee P4 (Assigned)
The ratings reflect IMPL's below-average financial risk profile,
marked by small net worth, high gearing, and weak debt protection
metrics, and its susceptibility to volatility in raw material
prices and fluctuations in foreign exchange rates. These
weaknesses are partially offset by the expected improvement in
IMPL's operating efficiency, after completion of its large ongoing
capital expenditure (capex) programme.
Outlook: Stable
CRISIL believes that IMPL's financial risk profile will improve
marginally, but remain stretched, over the medium term, on account
of its large ongoing debt-funded capex programme. The outlook may
be revised to 'Positive' if the company reports more-than-expected
growth in revenues while improving its profitability, or if its
financial risk profile improves significantly, driven by more-
than-expected equity infusion. Conversely, the outlook may be
revised to 'Negative' in case of lower-than-expected utilization
of its new capacities or if any cost overrun translates into
additional debt to fund its ongoing capex, thereby adversely
affecting its financial risk profile or debt servicing ability.
About Indigo Metalloys
IMPL, incorporated in 2007, started operations in 2008. It
manufactures and trading in copper and other non-ferrous metal
products. The company primarily manufactures copper and copper
alloy products such as copper tubes, copper pipes, polyvinyl
chloride-coated copper tubes, and copper-finned tubes, which
contribute around 70 per cent to its revenues. Moreover, the
company trades in brass tubes, nickel alloy pipes, and a few steel
materials, mostly imported from China and Korea. In 2010-11, IMPL
has undertaken a large capex of INR170 million to increase its
capacity by 400 tonnes per month. The ongoing capex is being
funded with a project gearing of around 2:1.
IMPL reported a profit after tax (PAT) of INR4.5 million on net
sales of INR219 million for 2009-10 (refers to financial year,
April 1 to March 31) as against a PAT of INR1 million on net sales
of INR132 million for 2008-09.
JAWANDAMAL DHANNAMAL: ICRA Reaffirms 'LBB+' Rating on LT Loan
-------------------------------------------------------------
ICRA has re-affirmed an 'LBB+' rating to INR20 Crore long term
fund based bank facilities and an 'A4+' rating to INR61 Crore
short term non fund based bank facilities of Jawandamal
Dhannamal. The INR20 crore long term fund based limit is a
sublimit of the short term non fund based limit such that the
overall limit does not exceed INR61 crore.
The ratings continue to be constrained by the high competitive
intensity of the industry and significant dependence of revenues
on steel trading which is susceptible to adverse movements in
steel prices. The ratings also factor in the decline in the
Operating Income in FY10 on account of weak demand conditions due
to the economic slowdown and increase in the company's receivable
days in FY 10. Nevertheless, the ratings draw comfort from JD
group's established track record in the businesses of steel
trading and ship-breaking, marginal improvement in the
profitability indicators and a low gearing of -0.5x as on
March 31, 2010.
About Jawandamal Dhannamal
Jawandamal Dhannamal is a proprietary concern managed by
Mr. Devkinandan Gupta. The firm is engaged in the business of
trading in Iron and steel scrap and ship breaking. The firm owns a
ship breaking yard at Alang, Gujarat measuring 52*45 Yard.
Recent results:
JD recorded a net profit of INR2.26 Cr on an operating income of
INR92.19 Cr for the year ending March 31, 2010. As per the
provisional numbers for the 8 month period ending November 30,
2010, JD reported a net profit of INR2.18 Crores on an operating
income of INR84.98 Crore.
JAYESH OIL: CRISIL Reaffirms 'BB' Rating on INR20MM Cash Credit
---------------------------------------------------------------
CRISIL's ratings on the bank facilities of Jayesh Oil Trade Pvt
Ltd, which is part of the Jayesh group, continue to reflect the
Jayesh group's low profitability because of intense competition in
the refined oil trading business, and susceptibility of revenues
to adverse changes in government regulations.
Facilities Ratings
---------- -------
INR20.0 Million Cash Credit BB/Stable (Reaffirmed)
INR80.0 Million Letter of Credit P4+ (Reaffirmed)
The ratings also factor in the group's below-average financial
risk profile marked by a weak total outside liabilities to
tangible net worth (TOL/TNW) ratio, inadequate interest coverage
and risk coverage ratios, and modest net worth. These weaknesses
are partially offset by the promoter's experience in the edible
oil industry, and the Jayesh group's established market position.
For arriving at its ratings, CRISIL has combined the business and
financial risk profiles of Jayesh and Bhogi Agro Traders Pvt Ltd
(Bhogi), together referred to as the Jayesh group. This is
because the two entities are engaged in the same business, have
operational linkages with each other, and are under common
promoters.
Outlook: Stable
CRISIL believes that the Jayesh group will continue to benefit
from its promoters' industry experience and its healthy
relationships with customers and refiners, over the medium term.
The outlook may be revised to 'Positive' if the group's net worth
increases, and financial risk profile strengthens. Conversely, the
outlook may be revised to 'Negative' in case of significant
deterioration in the group's profitability or liquidity.
Update
The Jayesh group's operating income increased to INR5.1 billion in
2009-10 (refers to financial year, April 1 to March 31) from
INR2.4 billion in the previous year, primarily driven by increased
demand for palmolein oil amid lower domestic oil production, and
reduced import duty on crude palm oil (CPO) and refined, bleached,
and deodorised (RBD) palmolein oil. The group has been able to
increase its turnover on the back of its strong relations with
suppliers and brokers, supported by adequate and timely
enhancement in working capital lines by its lenders. Bhogi was
sanctioned a cash credit (CC) limit of INR100 million in
July 2009; it did not have any CC limit before that. The group
now enjoys a INR230-million CC limit and a INR130-million letter
of credit (LC) limit. To support its working capital
requirements, the promoters infused INR20 million in Jayesh during
the year; they had already infused INR65 million in the previous
year. The infusions were done to meet the requirements set by the
bank for the sanction of increased bank limits.
Historically, the operating margin of the Jayesh group has been
low at less than 1 per cent, considering the trading nature of its
operations. It reported an operating profit before depreciation,
interest, and tax (OPBDIT) margin of 0.8 per cent in 2009-10. In
the first half of 2010-11, the margin improved to 1.7 per cent
mainly because of rising palmolein prices during this period; the
group has taken a long forward position of about 20,000 tonnes of
palmolein oil amid rising prices. For the full year, CRISIL
believes that the margin will revert toward the long-term mean of
about 1 per cent, considering there could be some overheads booked
at the year-end closure of accounts.
Jayesh (standalone) reported a PAT of INR6.5 million on net sales
of INR3.1 billion for 2009-10, against a PAT of INR3.4 million on
net sales of INR1.8 billion for 2008-09.
About the Group
The Jayesh group trades in RBD palmolein oil. The group is managed
by the Shethia family, which has been in this business for nearly
three decades. Jayesh sources RBD palmolein oil from established
refiners, such as Gokul Refoils & Solvent Ltd, Adani Willmar Ltd,
Bunge India Pvt Ltd, and Ruchi Soya Industries Ltd, and sells it
through a network of dealers and wholesalers.
KAN FOODS: CRISIL Assigns 'BB-' Rating to INR16.9MM Term Loan
-------------------------------------------------------------
CRISIL has assigned its 'BB-/Stable/P4+' ratings to the bank
facilities of Kan Foods.
Facilities Ratings
---------- -------
INR16.9 Million Term Loan BB-/Stable (Assigned)
INR45.0 Million Export Packing P4+ (Assigned)
Credit
INR30.0 Million Foreign Bill P4+ (Assigned)
Purchase
The ratings reflect the susceptibility of Kan's revenues to
adverse regulatory changes and risks inherent in the sea food
industry, and customer concentration in the firm's revenue
profile. These weaknesses are partially offset by the extensive
industry experience of Kan's partners, the firm's established
customer relationships, and moderate financial risk profile,
backed by efficient working capital management.
Outlook: Stable
CRISIL believes that Kan will continue to benefit from its
partners' extensive experience in the sea food industry and
established customer relationships. The outlook may be revised to
'Positive' in case of more-than-expected growth in topline or
infusion of capital by partners, leading to better financial risk
profile. Conversely, the outlook may be revised to 'Negative' in
case Kan's profitability weakens due to increased competition or
deterioration in the firm's working capital management.
About Kan Foods
Set up in 2007, Kan is a partnership firm that manufactures and
exports surimi, which is a fish-based food product. The firm's
manufacturing facilities are in Porbandar (Gujarat) and have an
installed capacity to manufacture 40 tonnes per day of surimi.
The firm exports under its own brand to countries such as Japan,
Russia, Korea and Taiwan.
Kan reported a book profit of INR11.1 million on net sales of
INR367.3 million for 2009-10 (refers to financial year, April 1 to
March 31), against a book profit of INR8.5 million on net sales of
INR359.3 million for 2008-09.
MARTOPEARL ALLOYS: CRISIL Assigns 'BB-' Rating to Cash Credit
-------------------------------------------------------------
CRISIL has assigned its 'BB-/Stable/P4+' ratings to the bank
facilities of Martopearl Alloys Pvt Ltd. The ratings reflect
MAPL's small scale of operations and small net worth, which
restricts the company's financial flexibility, and exposure to
risks related to volatility in raw material prices. These rating
weaknesses are partially offset by MAPL's promoter's extensive
experience in the castings industry, and diversified customer
profile.
Facilities Ratings
---------- -------
INR30 Million Cash Credit BB-/Stable (Assigned)
INR22.5 Million Proposed Long BB-/Stable (Assigned)
Term Bank Loan Facility
INR2.5 Million Letter of Credit P4+ (Assigned)
INR25 Million Bank Guarantee P4+ (Assigned)
Outlook: Stable
CRISIL believes that MAPL will continue to benefit over the medium
term from its established presence in the castings business, with
healthy revenue diversity, and its comfortable gearing and healthy
debt protection metrics. The outlook may be revised to 'Positive'
if MAPL significantly scales up its operations, and improves its
sales and operating profitability on the back of stabilization of
its recently enhanced capacities. Conversely, the outlook may be
revised to 'Negative' in case of lesser-than-expected demand for
MAPL's products, or significant increase in raw material prices,
which can result in lower-than-expected profitability for the
company, or if MAPL undertakes a large, debt-funded capital
expenditure, leading to deterioration in its financial risk
profile.
About Martopearl Alloys
MAPL was set up in 1985 by first-generation technocrat, Mr. M S R
V Prasad, a qualified and experienced metallurgical engineer. The
company, based in Andhra Pradesh, manufactures steel and alloy
steel castings, with capacities of 6,000 tonnes per annum (tpa)
(enhanced from 3000 tpa). MAPL manufactures these castings in
various customised sizes and specifications to suit the specific
requirements of its clients. These castings are used in
metallurgical, cement, mining and mineral, and thermal power
industries. MAPL's clientele includes NTPC Ramagundam, a part of
National Thermal Power Corporation, PES Engineers (rated 'A-
/Stable/P2+' by CRISIL) , Alstom Projects India Ltd, and Neyveli
Lignite Corporation Ltd (rated 'AAA/Stable/P1+' by CRISIL).
MAPL reported a profit after tax (PAT) of INR4.19 million on net
sales of INR248 million for 2009-10 (refers to financial year,
April 1 to March 31), against a PAT of INR1.34 million on net
sales of INR238 million for 2008-09.
MYK SPINNING: ICRA Reaffirms 'LBB+' Rating on INR5.2cr Term Loan
----------------------------------------------------------------
ICRA has reaffirmed the rating assigned to the INR5.2 crore term
loans and the INR4.8 crore fund based facilities of MYK Spinning
Industries Limited at 'LBB+'. ICRA has also re-affirmed the
rating assigned to the INR3.5 crore non-fund based facilities of
MYKSIL at 'A4+'. The outlook on the long term rating is stable.
ICRA withdraws the 'LBB+' rating outstanding on the INR1.77 crore
term loans of the company, as the same has been fully repaid.
The re-affirmation of ratings takes into account the favorable
demand environment for yarn industry, established client
relationship resulting in steady revenue growth, presence in finer
count yarn which entails healthy margins, effective procurement
strategy with locational advantage of being near the cotton
growing area and significant experience of the promoters in the
spinning business. However the rating continues to be constrained
by the stretched financial profile characterized by high gearing
and weak debt coverage indicators owing to the debt funded capital
expenditure and losses incurred by the company in the past,
company's small scale of operations, vulnerability of earnings to
high cotton prices, the recent restriction of cotton yarn exports
and intense competition in a highly fragmented industry which
suffers from limited product differentiation.
About MYK Spinning
Promoted by Mr. P. Muni Krishna, MYK Spinning Industries Limited,
part of the Parasakthi group is engaged in the manufacture of
cotton yarn. The company manufactures cotton yarn from 40's
counts to 80's counts. The company procures cotton from ginners
within Andhra Pradesh and uses medium and long staple cotton of
MCU and DCH variety.
ROLEX RINGS: CRISIL Downgrades Rating on INR2.3BB Term Loan to 'D'
------------------------------------------------------------------
CRISIL has downgraded its ratings on the Rolex Rings Pvt Ltd's
long-term bank loan facilities to 'D' from 'B+/Negative', and on
the company's cash credit facility to 'C' from 'B+/Negative'. The
rating on Rolex Rings' short-term bank facilities has been
reaffirmed at 'P4'.
Facilities Ratings
---------- -------
INR375 Million Cash Credit C (Downgraded from
'B+/Negative')
INR2.3974 Billion Rupee Term Loan D (Downgraded from
'B+/Negative')
INR177.6 Million Proposed Long-Term D (Downgraded from
Bank Loan Facility 'B+/Negative')
INR1.3 Bil. Bill Purchase-Discounting P4 (Reaffirmed)
Facility
INR800 Million Letter of Credit P4 (Reaffirmed)
The downgrade to the 'D' rating is driven by the recent instances
of delay by Rolex Rings in servicing its debt; the delays have
been caused by the company's weak liquidity. The timing of Rolex
Rings' large, debt-funded capital expenditure of INR2.28 billion
coincided with the significant decline in the company's
performance in terms of sales and profitability in wake of the
depressed demand scenario in the economic aftermath post September
2008. Moreover, the company's new capacities were installed in
2010-11 (refers to financial year, April 1 to March 31) with
significant time and cost overruns. The pressure on Rolex Rings'
liquidity was further accentuated by the delayed disbursement of
enhanced bank lines and partial release of funds earlier lien
marked as margin money for non-fund based limits and collateral
against a portion of the term loans. The 'C/P4' ratings reflect
Rolex Rings' weak financial risk profile, marked by an aggressive
gearing, average net worth, and weak debt protection metrics, and
working-capital-intensive operations. These rating weaknesses are
partially offset by Rolex Rings' dominant market position in the
bearing race segment.
About Rolex Rings
Set up as a partnership firm in 1978, Rolex Rings was
reconstituted as a private limited company in 2003. It
manufactures forged bearing races, which cater to the requirements
of bearing manufacturers supplying mainly to the automobile
sector. The company is managed by Mr. Manesh Madeka along with
his six brothers. Rolex Rings attracted private equity investment
of INR1.51 billion, from New Silk Route in 2007-08, which was
mainly invested in the recently completed INR2.28-billion Hatebur
project. The Hatebur project will enable Rolex Rings to
manufacture automobile components such as gear boxes, third
generation bearings, wheel hubs, and transmission boxes, thereby
enhancing its revenue diversity. Following the equity infusion,
New Silk Route has nominated two directors on Rolex Rings' board.
As per the initial agreement with the private equity firm, Rolex
Rings had to launch an initial public offering (IPO) after March
2012, on the basis of audited results of 2011-12, in order to
provide an exit to the private equity investors. However, because
of depressed demand from the end-user segment and low
profitability, the IPO plans have now been deferred for another
two years.
For 2009-10, Rolex Rings reported a net loss of INR73.48 million
on net sales of INR1530.0 million, against a net loss of INR9.67
million on net sales of INR2593.0 million for 2008-09.
SHIVAJI ROLLER: CRISIL Reaffirms 'B+' Rating on INR50M Cash Credit
------------------------------------------------------------------
CRISIL's ratings on the bank facilities of Shivaji Roller Flour
Mills Pvt Ltd continue to reflect SRFMPL's weak financial risk
profile marked by small net worth, weak debt protection metrics,
modest scale of operations, and low profitability because of
intense competition in a highly fragmented market. These rating
weaknesses are partially offset by the benefits that SRFMPL
derives from its promoters' established track record in the wheat
flour industry, and strong clientele.
Facilities Ratings
---------- -------
INR50 Million Cash Credit B+/Stable (Reaffirmed)
INR100 Million Bank Guarantee P4 (Reaffirmed)
Outlook: Stable
CRISIL believes that SRFMPL will continue to benefit from its
established market position backed by strong relationships with
its clients, over the medium term. However, the company's scale
of operations is expected to remain small over the medium term.
The outlook may be revised to 'Positive' if SRFMPL increases its
scale of operations, improves debt protection metrics, and
increases net worth through fresh equity infusion. Conversely,
the outlook may be revised to 'Negative' if the company's reliance
on debt increases, or there is a decline in its revenues or
operating margin.
Update
SRFMPL's revenue increased by 8 per cent in 2009-10 (refers to
financial year, April 1 to March 31) and has achieved revenue of
around INR600 million in the first nine months of 2010-11. The
liquidity of the company is supported by moderate bank limit
utilization of around 78 per cent for the past seven months
through October 2010, absence of any term debt obligations, and
infusion of unsecured loans of around INR25 million by the
promoters.
SRFMPL reported a profit after tax (PAT) of INR1.8 million on net
sales of INR725.2 million for 2009-10, against a PAT of INR2
million on net sales of INR673 million for 2008-09.
About Shivaji Roller
Set up in 1972, Navi Mumbai-based SRFMPL manufactures wheat
products, such as maida (refined flour), suji, rawa, atta
(unrefined flour), and bran. The company's operations are managed
by Mr. Ajay Goyal. SRFMPL's processing unit, located in Airoli,
has a capacity of 220 tonnes per day (tpd) of maida and 45 tpd of
atta.
SHREE GIRIRAJ: CRISIL Upgrades Rating on Cash Credit to 'B+'
------------------------------------------------------------
CRISIL has upgraded its rating on the long term bank facilities of
Shree Giriraj Metalex Pvt Ltd to 'B+/Stable' from 'B/Stable' while
reaffirming the short term rating at 'P4'.
Facilities Ratings
---------- -------
INR20.0 Million Cash Credit B+/Stable (Upgraded from
'B/Stable')
INR150.0 Million Letter of Credit P4 (Reaffirmed)
The upgrade is driven by improvement in SGMPL's financial risk
profile, led by substantial equity infusion by promoters and
growth in turnover. The equity infusion has also resulted in a
substantial improvement in the net worth, thereby somewhat
increasing the cushion to absorb any losses relating to inventory
and debtor risks. The promoters have also brought in large
unsecured loans for meeting incremental working capital
requirements. However, large incremental working capital
requirements continue to constrain its liquidity and will remain a
rating sensitivity factor.
The ratings reflect SGMPL's below-average financial risk profile,
marked by high gearing, modest net worth, weak debt protection
metrics, and high total outside liabilities to tangible net worth
ratio, and its exposure to inventory and debtor risks. These
rating weaknesses are partially offset by the extensive industry
experience of SGMPL's promoters.
Outlook: Stable
CRISIL believes that SGMPL's financial risk profile will remain
constrained by its low margins and large working capital
requirements. The outlook may be revised to 'Positive' if SGMPL's
profitability and turnover increase significantly, and its
financial risk profile improves, on account of improvement in
receivables collection. Conversely, the outlook may be revised to
'Negative' if the company's financial risk profile weakens because
of large incremental working capital requirements or lower-than-
anticipated increase in its margins.
About Shree Giriraj
The Shree Giriraj group was set up in 1997, comprising two
proprietorship concerns, Shree Giriraj Associates and Shree
Giriraj Steel, and one Hindu undivided family, Shree Giriraj
Enterprise. Set up in 2005 by the late Mr. Bhupendra Bhalala,
SGMPL trades in steel products. SGMPL's products include square
bars, channels, joists, beams, and flats in the long steel
products segment, and hot rolled/mild steel plates, and mild steel
slabs in the flat steel products segment.
SGMPL reported a profit after tax (PAT) of INR5.6 million on net
sales of INR2.1 billion for 2009-10 (refers to financial year,
April 1 to March 31), as against a PAT of INR3.5 million on net
sales of INR1.4 billion for 2008-09.
SKS TEXTILES: ICRA Reaffirms 'LBB+' Rating on INR6.35cr Term Loan
-----------------------------------------------------------------
ICRA has reaffirmed the 'LBB+' rating assigned to the INR6.35
crore term loan and INR12.50 crore long term fund based limits of
SKS Textiles Private Limited. The long term rating has been
assigned a stable outlook. ICRA has also reaffirmed the A4+ rating
to the INR1.50 crore short term non fund based limits of SKS.
The ratings reaffirmation takes into account the rich experience
of the promoters, the improvements in the liquidity position of
the company through reduced debtor turnover days, as well as the
company's competitive advantages gained through favorable plant
location at Bhiwandi. In addition, the textile industry also
continues to benefit from the support extended by the Government
through various policy initiatives. The ratings are, however,
constrained by the company's small scale of operations with
declining operating margins over the past two years. The rating
also takes into account the vulnerability of the operating margins
to volatilities in yarn prices and the high working capital
intensity of operations. While the demand outlook for the textile
industry is gradually improving, the industry continues to face
high competitive intensity with large number of players and low
entry barriers.
About SKS Textiles
SKS Textiles Private Limited is engaged in the manufacturing of
cotton fabric and polyester blended fabrics used primarily for
bottom wear and shirtings. The company has been in the textile
business since 1982. The company's plant, located at Bhiwandi, is
equipped with 63 weaving machines with an annual production
capacity of 3 million sq meters of fabric. The company markets its
fabric under two distinct brands, the 'Pierri Carlo' brand name
for polyester blended fabric (bottom wear only) and under
'Cotbelly's' brand name for cotton fabric (bottom wear &
shirtings).
Recent Results
SKS reported a net profit of INR0.72 crore in FY 2010 on an
operating income of INR87.11 crore as compared to a net profit of
INR0.85 crore in the previous year on an operating income of
INR62.28 crore
TUNGABHADRA POWER: CRISIL Rates INR415 Million LT Loans at 'D'
--------------------------------------------------------------
CRISIL's rating on the long-term bank loans of Tungabhadra Power
Company Pvt Ltd continue to reflect TPCPL's delays in servicing
its term debt; the delays have been caused by TPCPL's weak
liquidity, as the company is yet to commence commercial
operations.
Facilities Ratings
---------- -------
INR415 Million Long-Term Loans D (Reaffirmed)
TPCPL is exposed to risks related to customer concentration in
revenue profile, and to inadequate water flow through the
barrages. TPCPL is, however, expected to benefit from the low cost
of power generation and efficient plant design, once it commences
commercial operations.
Update
TPCPL has been delaying in servicing its term debt since start of
scheduled repayment; TPCPL is yet to pay its instalments which
were due in September 2010 and December 2010. Furthermore, the
interest is also being serviced with a lag of three to four
months. State Bank of Hyderabad has classified TPCPL's account as
a non-performing asset. The company repaid a term loan of INR45.5
million in 2009-10 (refers to financial year, April 1 to March 31)
against an obligation of INR51 million. The company has been
meeting its interest and principal obligations through unsecured
interest-free loans (from promoters), which rose to INR319 million
as on September 30, 2010 from INR149 million as on March 31, 2009.
The plant is expected to start power generation from April 2011
following the state government's acceptance of the villagers'
demand in November 2010. The government has offered revised
Resettlement and Rehabilitation (R&R) with full resettlement for
all the three villages (one fully submerged village and two
partially submerged), against earlier offered resettlement for
only those villagers who were losing their land. TPCPL has not
received any compensation from the government for the losses it
has incurred because of the delay in commencement of commercial
operations.
About Tungabhadra Power
Incorporated in 1999, TPCPL obtained licence from the Government
of Karnataka (GoK) to produce power from the mini-hydel project
(part of the Singatalur lift irrigation scheme) proposed over the
Singatalur barrage near Thimmalapur village in Bellary District
(Karnataka). The plant has an installed capacity of 18 megawatts
(MW; four units of 4.5 MW each). The project cost of around INR650
million was funded in a debt-to-equity ratio of 65:35. Work on the
power plant project commenced in February 2005, and the plant was
to be commissioned in February 2007. There was a time overrun of
nearly 23 months because of delay in completion of the Singatalur
barrage by the irrigation department of GoK, and floods in the
river Tungabhadra, leading to a halt in the plant construction
work. The plant was finally constructed in December 2008.
UNITEX INT'L: ICRA Reaffirms 'LD' Rating on INR13.5cr Term Loan
---------------------------------------------------------------
ICRA has reaffirmed the 'LD' rating to the INR13.5 crore term
loans of Unitex International Private Limited. ICRA has also
reaffirmed 'A5' rating to the INR4.5 crore fund-based facilities
and INR3.5 crore non-fund based facilities of the Company.
The reaffirmation of ratings reflects the continuing delay by the
Company towards servicing of interest payments on term loans owing
to weak liquidity. While the company enjoyed the benefit of
extended moratorium on principal obligations, delayed servicing of
interests continues to be a concern.
Promoted in 2006 as a joint venture between Mr. P.K. Radhakrishnan
and his wife Ms. V.K. Prabhalakshmi (the Indian promoters, holding
55 per cent equity stake), and Mr. Toshio Noguchi and Suzuki (the
foreign promoters, holding 45 per cent equity stake), UIPL is a
closely-managed business engaged in the manufacture (sewing) of
readymade garments, predominantly in the woven segment. The
Company has its manufacturing facilities at Chennai with estimated
capacities of 2.5 million garments (pieces of shirts) per annum.
UIPL commenced commercial production in May 2008. The Company
primarily caters for garment exports to various brands/ marketers
in the United States, Europe and Japan. Direct exports formed
around 50 per cent of the Company's revenues in its first year of
operations, with contract work undertaken for garmenting
contributing to the rest. UIPL reported a loss of INR2.89 crore on
an operating income of INR7.77 crore in 2008-09.
VACCU PLAST: CRISIL Assigns 'B+' Rating to INR45 Million Term Loan
------------------------------------------------------------------
CRISIL has assigned its 'B+/Stable' rating to the bank facilities
of Vaccu Plast (India) Pvt Ltd.
Facilities Ratings
---------- -------
INR15.0 Million Cash Credit B+/Stable (Assigned)
INR45.0 Million Term Loan B+/Stable (Assigned)
The rating reflects Vaccu Plast's weak financial risk profile,
further constrained by the company's aggressive capital
expenditure (capex) plans, and exposure to risks related to high
customer concentration in an intensely competitive industry. These
rating weaknesses are partially offset by Vaccu Plast's healthy
performance in the nascent stage of operations.
Outlook: Stable
CRISIL believes that Vaccu Plast will maintain its credit risk
profile over the medium term, supported by healthy performance of
the company in the nascent stages. The outlook may be revised to
'Positive' if the company contracts less-than-expected debt to
fund its capex, faces no cost and time overruns while implementing
its project, or achieves higher-than-expected cash accruals.
Conversely, the outlook may be revised to 'Negative' if Vaccu
Plast's financial risk profile deteriorates further because of
higher-than-expected debt-funded capex plans, or if the company's
operating margin deteriorates.
About Vaccu Plast
Vaccu Plast, incorporated in 2006, processes metallised polyester
film, casting polypropylene film and bi-axially-oriented
polypropylene, in the range of 12 to 50 microns. The company also
manufactures high refractive index films used in security hologram
films. Vaccu Plast was promoted by Mr. Bansal and Mr. Khandelwal.
Currently, Vaccu Plast is wholly owned by the Bansal family. Vaccu
Plast has capacity to process about 4200 tonnes of films per annum
at its plant at Mathura (Uttar Pradesh). The company also
undertakes job work for processing films for players in the
packaging industry, which contributed about 21 per cent to its
total revenues in 2009-10 (refers to financial year, April 1 to
March 31).
Vaccu Plast reported a profit after tax (PAT) of INR4.9 million on
net sales of INR131.5 million for 2009-10, against a net loss of
INR0.8 million on net sales of INR44.3 million for 2008-09.
VARUNA SPINNING: CRISIL Cuts Rating on INR60.4MM Term Loan to 'D'
-----------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Varuna
Spinning Mills Pvt Ltd to 'D/P5' from 'B+/Stable/P4'. The
downgrade reflects the delay in principal repayment by the company
on account of weak liquidity.
Facilities Ratings
---------- -------
INR60.4 Million Term Loan D (Downgraded from
'B+/Stable')
INR45.0 Million Cash Credit Limit D (Downgraded from
'B+/Stable')
INR6.0 Million Bank Guarantee P5 (Downgraded from 'P4')
INR10.0 Million Letter of Credit P5 (Downgraded from 'P4')
Varuna also has an average financial risk profile, and small scale
of operations in the yarn industry. These rating weaknesses are
partially offset by the experience of Varuna's promoters in the
yarn industry.
About Varuna Spinning
Set up in 1994, Varuna manufactures polyester yarn, viscose yarn
and polyester viscose yarn. The company's plant at Lucknow (Uttar
Pradesh) has capacity of 20,000 spindles. Varuna's clientele is
located across Bhiwandi (Mumbai), Ludhiana (Punjab), Bhilwara
(Rajasthan), and Gorakhpur (Uttar Pradesh). The company is also
building a warehouse, on a total area of around 105,000 square
feet (sq ft) at a project cost of around INR30 million, to rent
out to corporate entities; it has received a letter of intent from
Whirlpool of India Ltd for taking 50,000 sq ft of space on rent.
Varuna reported a profit after tax (PAT) of INR0.07 million on net
sales of INR239.3 million for 2009-10 (refers to financial year,
April 1 to March 31), against a PAT of INR1.8 million on net sales
of INR246.1 million for 2008-09.
=========
J A P A N
=========
* Moody's Assigns Ratings on Regional Financial Institutions' CLOs
------------------------------------------------------------------
Moody's Japan K.K. has assigned provisional ratings to the
Synthetic CLOs of Regional Financial Institutions (Clover, LLC.)
referencing corporate loans to small and medium-sized Japanese
enterprises.
The ratings address the expected loss posed to investors by the
final maturity date. The structure allows for the timely payments
of interest and ultimate payment of principal by the final
maturity date. The rated promise on the Class C notes is that the
total amount of principal paid on the notes be equal to the
initial principal amount of the notes. The rating on the Class C
notes does not take into account interest payments.
Moody's issues provisional ratings in advance of the final sale of
securities. These ratings, however, represent Moody's preliminary
credit opinions only. Upon a conclusive review of the transaction
and associated documentation, Moody's will endeavor to assign
definitive ratings to the securities. Definitive ratings may
differ from provisional ratings. The provisional rating is based
on information received as of February 8, 2011.
The complete rating actions are:
- Deal Name: Synthetic CLO of Regional Financial Institutions
(Clover, LLC.)
- Issuer: Clover, LLC.
- Class, Issue Amount, Rating
- Series One Class A Unsecured Notes, JPY 1,900,000,000, (P)Aaa
(sf)
- Series One Class B Unsecured Notes, JPY 578,646,000, (P)Baa2
(sf)
- Series One Class C Unsecured Notes, JPY 175,928,000, (P)Caa2
(sf)*
* The rating on the Class C notes does not take into account
interest payments.
- Scheduled Interest Rate: Floating
- Payment Frequency: Quarterly
- Expected Issue Date: March 11, 2011
- Final Maturity Date: May 28, 2014
- Reference Obligation: Loans to small and medium-sized
enterprises in Japan
- Initial Total Reference Obligation Amount: JPY 3,141,574,000
- Number of Obligors: 140 (The obligor with the highest loan
amount comprises approximately 3% of the Initial Total
Reference Obligation Amount.)
- Originator/First CDS Buyer/Servicer: THE SAIKYO SHINKIN BANK,
Toyama Shinkin Bank, KITAISEUENO SHINKIN BANK, Osaka Shinkin
Bank, The Awaji Shinkin Bank
- First CDS Seller/Second CDS Buyer: Japan Finance Corporation
(JFC, Aa2)
- Second CDS Seller: Clover, LLC.
- Independent Auditor: Tokyo Kyodo Accounting Office
- Note Trustee/Initial Deposit Bank: Mizuho Corporate Bank, Ltd.
(Mizuho Corporate Bank, Aa3/P-1)
- Calculation Agent: Mizuho Trust & Banking Co., Ltd.
- Arranger: Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
Rating Rationale
JFC and each originator will enter a credit default swap (First
CDS) agreement that references a pool of corporate loans for SMEs
from each originator. The originators, as the protection buyers
under the First CDS agreements, will pay a premium to JFC, as the
protection seller, which in turn will make a credit protection
payment to each of the originators (under certain conditions) if
the reference pool suffers a credit event.
JFC will enter a credit default swap (Second CDS) agreement with
the Issuer to transfer the credit risk proceeds from the First CDS
agreements to the Issuer. JFC, as the protection buyer under the
Second CDS agreement, will pay a premium to the Issuer, as the
protection seller, which in turn will make a credit protection
payment to JFC (under certain conditions) if the reference pool
suffers a credit event.
The Issuer will issue the Class A, B, and C Notes. At closing,
the proceeds from the notes will be deposited into fixed-term
deposit accounts at Mizuho Corporate Bank. The deposit will be
used for the principal payment and credit protection payment.
Credit enhancement is provided by the senior/subordinated
structure. Subordination comprises around 39.5% for the Class A
Note, 21.1% for the Class B Note, and 15.5% for the Class C Note.
The formula used to calculate the subordination in this
transaction is A / B, where "A" equals the total principal amount
of the Notes subordinated to the subject Notes and the total
amount of the credit protection threshold, and "B" equals the
initial total reference obligation amount.
The Originators will individually hold the credit protection
threshold amounts and use them to cover losses incurred on the
loans that they themselves have originated (the "sub-pool"). The
credit protection threshold amounts cannot be used to cover losses
incurred against other sub-pools. However, the Class B and C
Unsecured Notes can be used to cover losses incurred in all the
sub-pools.
Redemption of the Class A and B Notes will be made every quarter
on a pass-through basis (basically pro-rata) in accordance with
reductions in the notional amounts. Redemptions of the Class C
Note will be made by hard-bullet payment.
The proceeds from the interest on the deposits and the CDS premium
payments by JFC will be used for the coupon payments on the Class
A to C Notes.
The weighted average life of the reference pool is approximately
1.5 years.
The waterfall is designed to prioritize coupon payments on the
Class A and B Notes over the Class C Note if the buyers of the CDS
go bankrupt or fail to pay premiums and then this will result in
the termination of the CDS agreement causing shortfalls in the
coupons on the Class A and B Notes. Liquidity support is also
available in the form of a cash reserve mechanism that sets aside
the first and second coupon payments on the Class C Note.
The ratings are based mainly on the strength of transaction
structure, the credit of the reference obligation, the credit of
the deposit bank and the servicer's experience.
Moody's estimates the annualized expected default rate in the
reference pool at approximately 2.9%, taking into consideration
the attributes of the reference obligations, performance data on
existing securitization pools, macroeconomic trends, and
government support measures for SME financing. Moody's also
assumes a zero recovery rate from a credit event. To determine
the rating, Moody's also conducted a cash flow analysis, adding
stress consistent with the assigned rating on parameters such as
the expected default rate.
The principal payments of the Notes will be deposited into an
account at an eligible financial institution (with a Moody's long-
term deposit rating of A2 or higher and a short-term rating of P-
1) pursuant to the documents governing this transaction. At
closing, the proceeds from the notes will be deposited in fixed-
term deposit accounts at Mizuho Corporate Bank.
Moody's examined the operations of the originator and considers it
sufficiently capable of servicing the reference obligations as
servicer, given its substantial SME lending experience.
Moody's did not receive or take into account any third-party due
diligence reports on the underlying assets or financial
instruments in this transaction.
The V score for this transaction is Medium. Moody's has assigned
ratings to JFC's SME CLOs for six years. The reference
obligations and the structure of this transaction is a common one,
and the level of complexity is similar to that of other JFC SME
CLOs.
Moody's V scores provide a relative assessment of the quality of
available credit information and the potential variability of
various inputs in a rating determination. The V score ranks
transactions by the potential for significant rating changes owing
to uncertainty about the assumptions due to data quality,
historical performance, the level of disclosure, transaction
complexity, modeling, and the transaction governance that underlie
the ratings. V scores apply to the entire transaction, not to
individual tranches.
If the transaction default rate used in determining the initial
rating were changed to 4.0% or 5.0%, the model output for the
Class A would not change. However, the model output for Class B
and Class C would change from Baa2 to Baa3 or Ba2 (Class B); from
Caa2 to Ca or Ca (Class C), respectively (the "parameter
sensitivities").
Parameter sensitivities are not intended to measure how the rating
of the security might migrate over time; rather, they are designed
to provide a quantitative calculation of how the initial rating
might change if key input parameters used in the initial rating
process differed. The analysis assumes that the deal has not
aged, and does not factor structural features such as sequential
payment effect. Parameter sensitivities reflect only the ratings
impact of each scenario from a quantitative/model-indicated
standpoint. Qualitative factors are also taken into consideration
in the ratings process, so the actual ratings that would be
assigned in each case could vary from the information presented in
the parameter sensitivity analysis.
=========
K O R E A
=========
KUMHO ASIANA: Aims to Exit Debt Workout Program This Year
---------------------------------------------------------
The Korea Times reports that Kumho Petrochemical, the de facto
holding company of Kumho Asiana Group, is hoping to leave its debt
workout program by the end of this year.
"Our top priority for this year is to put our business back on a
normal track. That means graduating from the workout program set
by creditors by the end of this year," The Korea Times quotes Park
Chan-koo, the firm's chairman, as saying in a news conference held
in Yeosu.
Since early last year, the Korea Times recalls, the nation's top-
tier petrochemical firm has been under a creditor-led debt workout
program alongside Kumho Industrial and Kumho Tire after the
group's heavy liquidity woes.
"As part of a consistent move, we will sell all stakes of Kumho
Tire owned by us from July, to help strengthen financial
soundness," the chairman said, adding he owns some one million
Kumho Tire shares, according to The Korea Times.
According to the report, the chairman said he expects to report
better earnings for 2011 than last year thanks to the tightening
global rubber market.
The Korea Times discloses that Kumho Petrochemical reported a
KRW364.5 billion operating profit last year and sales of
KRW3.89 trillion.
According to the report, Kium Securities, a local brokerage,
projects its operating and net profit will exceed over KRW1
trillion this year as healthy car and tire demand will lift the
demand for synthetic rubbers.
Based on the "financial soundness priority," the Korea Times notes
that the company not planning to construct another manufacturing
facility abroad. But Kumho is mulling the possibility to form a
joint venture to hedge investment risk and to bolster its
international profile in its key businesses, Mr. Park said, the
Korea Times reports.
"There is more room for shares of Kumho Petrochemical to rise.
But that's depends on steady business momentum," Mr. Park added.
The Korea Times states that the company doesn't have any imminent
plans to change its corporate identity (CI) or to merge other
affiliates as they are secondary issues.
Kumho Petrochemical mainly produces synthetic rubber, resins,
rubber chemicals and electronics materials. It is the world's
fourth largest producer of synthetic rubber.
As reported in the Troubled Company Reporter-Asia Pacific on
August 6, 2009, The Korea Herald said Kumho Asiana Group has been
suffering from a liquidity crisis, which observers describe as a
typical case of acquisition indigestion, after acquiring Daewoo
Engineering & Construction in 2006 for KRW6.4 trillion. In a bid
to ease a cash shortage, the conglomerate in July 2009 decided to
re-sell the controlling stakes and management rights of Daewoo
Engineering. KDB, the main creditor of Kumho Asiana, in 2010
purchased the builder from the group.
In December 2009, Kumho Asiana's creditors decided to put two
ailing units -- Kumho Industrial Co. and Kumho Tire Co. -- under a
debt rescheduling program. Meanwhile, the group's other two units
-- Korea Kumho Petrochemical Co. and Asiana Airlines Inc. -- will
have to improve their financial health through rigorous self-
restructuring efforts as earlier agreed with creditors. Kumho
Asiana unveiled a restructuring plan on January 5, 2010, that
involves raising KRW1.3 trillion (US$1.1 billion) by selling off
assets, while cutting costs via a 20% reduction in executive
positions and wages, Yonhap News Agency reported.
About Kumho Asiana
Established in 1946, Kumho Asiana Group is a large South Korean
conglomerate, with subsidiaries in the automotive, industry,
leisure, logistic, chemical and airline fields. The group is
headquartered at the Kumho Asiana Main Tower in Sinmunno 1-ga,
Jongno-gu, Seoul, South Korea.
KUMHO ASIANA: Asiana Airline Swings to KRW236 Billion in 2010
-------------------------------------------------------------
Yonhap News reports that Asiana Airlines Inc. said Thursday that
it swung to the black in 2010 from a year earlier on strong demand
for air traffic.
According to the news agency, the carrier reported net profit of
KRW236 billion (US$212 million) last year, compared with a loss of
KRW266 billion a year earlier. Sales surged 31% on-year to a
record KRW5.07 trillion last year.
Yonhap says Asiana Airlines posted an operating profit of
KRW636 billion in 2010, shifting from an operating loss of
KRW237 billion a year earlier.
Asiana Airlines said it is targeting sales of KRW5.5 trillion and
operating income of KRW610 billion this year, Yonhap adds.
Meanwhile, Yonhap reports that Kumho Tire Co. also swung to profit
last year from losses in 2009.
Kumho Tire said in a regulatory filing that net income came to
KRW42.1 billion (US$38 million) in 2010, compared with a loss of
KRW776.2 billion the previous year, according to Yonhap.
Sales expanded 42.6% on-year to KRW2.7 trillion last year with
operating profit also turning to profits of KRW244.9 billion from
KRW213.6 billion in loss, Yonhap says.
According to the report, the tire company said the completion of a
debt-for-equity swap by creditor banks, coupled with gains in tire
sales and prices, helped bolster its financial structure.
As reported in the Troubled Company Reporter-Asia Pacific on
August 6, 2009, The Korea Herald said Kumho Asiana Group has been
suffering from a liquidity crisis, which observers describe as a
typical case of acquisition indigestion, after acquiring Daewoo
Engineering & Construction in 2006 for KRW6.4 trillion. In a bid
to ease a cash shortage, the conglomerate in July 2009 decided to
re-sell the controlling stakes and management rights of Daewoo
Engineering. KDB, the main creditor of Kumho Asiana, in 2010
purchased the builder from the group.
In December 2009, Kumho Asiana's creditors decided to put two
ailing units -- Kumho Industrial Co. and Kumho Tire Co. -- under a
debt rescheduling program. Meanwhile, the group's other two units
-- Korea Kumho Petrochemical Co. and Asiana Airlines Inc. -- will
have to improve their financial health through rigorous self-
restructuring efforts as earlier agreed with creditors. Kumho
Asiana unveiled a restructuring plan on January 5, 2010, that
involves raising KRW1.3 trillion (US$1.1 billion) by selling off
assets, while cutting costs via a 20% reduction in executive
positions and wages, Yonhap News Agency reported.
About Kumho Asiana
Established in 1946, Kumho Asiana Group is a large South Korean
conglomerate, with subsidiaries in the automotive, industry,
leisure, logistic, chemical and airline fields. The group is
headquartered at the Kumho Asiana Main Tower in Sinmunno 1-ga,
Jongno-gu, Seoul, South Korea.
KUMHO ASIANA: To Sell 24.7% in Daewoo Eng'g. to Foreign Investors
-----------------------------------------------------------------
Yonhap News reports that Kumho Asiana Group is seeking to sell its
stake in Daewoo Engineering & Construction Co. to overseas
investors, industry sources said.
According to the report, the source said the group is considering
selling a 24.7% stake in the builder via a block sale and other
means. The stake is owned by Kumho Asiana's four units -- Kumho
Industrial Co., Korea Kumho Petrochemical Co., Asiana Airlines
Inc. and Kumho Tire Co.
The report, citing an official at a creditor bank of Kumho Asiana,
says details of the stake sale have yet to be determined, but
creditors, including Korea Development Bank and the group will
discuss it soon.
Yonhap relates the sources said the stake sale may fetch more than
KRW1 trillion US$900 million).
"We have decided to sell the stake in Daewoo Engineering &
Construction held by Kumho Asiana's units to support the group's
debt rescheduling program," another creditor bank official said,
adding the proceeds from the stake sale will be used as working
funds of the group's four affiliates, according to Yonhap.
As reported in the Troubled Company Reporter-Asia Pacific on
August 6, 2009, The Korea Herald said Kumho Asiana Group has been
suffering from a liquidity crisis, which observers describe as a
typical case of acquisition indigestion, after acquiring Daewoo
Engineering & Construction in 2006 for KRW6.4 trillion. In a bid
to ease a cash shortage, the conglomerate in July 2009 decided to
re-sell the controlling stakes and management rights of Daewoo
Engineering. KDB, the main creditor of Kumho Asiana, in 2010
purchased the builder from the group.
In December 2009, Kumho Asiana's creditors decided to put two
ailing units -- Kumho Industrial Co. and Kumho Tire Co. -- under a
debt rescheduling program. Meanwhile, the group's other two units
-- Korea Kumho Petrochemical Co. and Asiana Airlines Inc. -- will
have to improve their financial health through rigorous self-
restructuring efforts as earlier agreed with creditors. Kumho
Asiana unveiled a restructuring plan on January 5, 2010, that
involves raising KRW1.3 trillion (US$1.1 billion) by selling off
assets, while cutting costs via a 20% reduction in executive
positions and wages, Yonhap News Agency reported.
About Kumho Asiana
Established in 1946, Kumho Asiana Group is a large South Korean
conglomerate, with subsidiaries in the automotive, industry,
leisure, logistic, chemical and airline fields. The group is
headquartered at the Kumho Asiana Main Tower in Sinmunno 1-ga,
Jongno-gu, Seoul, South Korea.
====================
N E W Z E A L A N D
====================
CRAFAR FARMS: Trial on Fonterra Shares Case Moved Until Next Year
-----------------------------------------------------------------
BusinessDay.co.nz reports that a legal stoush involving the Crafar
family, receivers of their huge dairy farming estate, and $4
million of shares in dairy giant Fonterra looks likely to drag
into next year.
BusinessDay.co.nz relates that receiver Brendon Gibson of
KordaMentha said a High Court telephone conference between parties
last week resulted in further timetabling orders for matters such
as discovery, with a trial not likely until next year.
According to BusinessDay.co.nz, Mr. Gibson also said a court order
last week for liquidation of the company that ran the Crafar
farms, Plateau Farms, has no impact on the case, or receivers'
efforts to realize the assets of 16 dairy farms currently under
conditional offer to a Chinese property developer.
BusinessDay.co.nz says KordaMentha claims the shares should be in
the names of the Crafar companies related to the farms, and should
never have been put in the names of Crafar family members.
BusinessDay.co.nz relates that Fonterra legal counsel David
Matthews has said the dairy company's constitution declared a
shareholder had to be "a supplier entity". This means the name of
the milk supplier on Fonterra's share register was deemed to be
the shareholder.
Mr. Matthews said at the time the receivers filed proceedings that
share ownership battles were not unusual in Fonterra's cooperative
share register when disputes over wills or wrong ownership
transfers occurred, however there was no precedent for the Crafar
case, according to BusinessDay.co.nz.
About Crafar Farms
Crafar Farms, New Zealand's largest family owned dairy business,
runs about 20,000 milking cows, and carries about 10,000 of other
stock. The company employed 200 staff.
Crafar Farms was placed in receivership in October 2009, by its
lenders Westpac Banking Corp., Rabobank Groep and PGG Wrightson
Finance. The banks, owed around NZ$200 million, put KordaMentha
partners Michael Stiassny and Brendon Gibson in as receivers after
Crafar Farms breached covenants on its loans.
The New Zealand Herald said CraFarms' banks have been working with
the Ministry of Agriculture and Forestry, Federated Farmers and
Fonterra to ease the Crafars out of their business. This follows
multiple convictions for environmental lapses and animal neglect
in recent years and the revelation on September 28, 2009, from
interest.co.nz of animal neglect on one of its large farms in the
King Country near Benneydale.
HANOVER FINANCE: Accuses Allied of Eroding Shareholder Value
------------------------------------------------------------
Paul McBeth at BusinessDesk reports that Hanover Finance has
launched a campaign against Allied Farmers as it gears up for its
NZ$5 million claim against the rural services company.
BusinessDesk says Hanover chairman David Henry and owner
Mark Hotchin have turned on the finance company's old website and
sent a letter to former investors, accusing Allied of eroding
shareholder value.
BusinessDesk relates that Messrs. Henry and Hotchin plan to
provide regular updates and will lobby to remove Allied managing
director Rob Alloway from the board,
"Allied appears to have sold assets well below fair value;
creating losses and further diminishing the value of the remaining
assets that were transferred to Allied," BusinessDesk quotes
Messrs. Henry and Hotchin as saying in their letter to investors.
"We have seen more than NZ$40 million in cash realized through the
'fire-sale' of Hanover assets, yet none of this has resulted in an
increase in shareholder value or a dividend distribution to you as
shareholders."
According to BusinessDesk, the relationship between the companies
has soured since December 2009, when Allied took on the Hanover
and United Finance loans books in a debt-for-equity swap in a bid
to transform itself into a major lender.
BusinessDesk relates that through most of last year Allied's
position worsened as the value of the Hanover assets was written
down, with both companies accusing the other of breaching the
terms of the agreement.
BusinessDesk adds that the stoush reached a crescendo at the end
of the year when Hanover served papers on Allied seeking NZ$5
million plus interest after the rural services company refused to
pay the final instalment of the transaction.
According to the report, Messrs. Henry and Hotchin said Allied is
ignoring the plan it put forward to investors in the 2009 deal,
and that the company's financial difficulties were worse than what
was presented at the time.
In October, BusinessDesk discloses, Allied doubled its loss to
NZ$77.6 million in the 12 months ended June 30, 3010, after taking
a NZ$40.1 million hit on the collapse of its Allied Nationwide
Finance unit.
The Hanover assets were valued at NZ$396 million before the swap,
and are worth less a quarter of their value since Allied took on
the loan book, BusinessDesk notes.
In December, BusinessDesk adds, the Securities Commission froze
some of Mr. Hotchin's New Zealand assets in a bid to make sure any
successful claims against Hanover would at least win some
compensation.
Hanover Finance's investors in December 2008 voted in favor of the
company's Debt Restructure Proposals, including a plan to fully
repay NZ$552.6 million principal it owes over five years.
However, Hanover Finance said in November 2009 it is no longer
likely to fully repay investors under a debt restructuring plan
due to a deterioration in the commercial property development
market, a TCR-AP report on Nov. 12, 2009, said.
In December 2009, investors agreed to swap their Hanover interests
for shares in Allied Farmers Ltd.
About Hanover Finance Limited
Hanover Finance Limited -- http://www.hanover.co.nz/-- is
New Zealand's third-largest privately-owned finance company with
total assets of NZ$796 million at December 31, 2007. The company
was established in 1984 to provide finance to the rural sector
and began lending to property developers and investors in 1995.
The loan portfolio has been gradually downsized since 2006 as a
result of a more cautious approach to lending in the face of
retail funding constraints.
=====================
P H I L I P P I N E S
=====================
BENGUET CORP: Accumulated Losses Narrow to PHP2.1 Billion
---------------------------------------------------------
The Manila Standard Today reports that Benguet Corp. posted a net
consolidated revenue of PHP2.26 billion in the first 10 months of
2010 based on interim audited financial statements.
According to the report, Benguet Corp. said the positive
performance considerably reduced its retained earnings deficit to
PHP2.19 billion from PHP4.46 billion as of end-2009.
Net equity now stands at positive PHP1.04 billion compared with a
negative PHP1.39 billion, the Manila Standard discloses.
The Manila Standard relates that Benguet Corp. said it had
registered cumulative losses in the recent past, mainly because of
low global metal prices, especially in the late 80s and 90s, and
various natural disasters that severely hampered its operations.
According to the Manila Standard, Benguet Corp. said it was also
burdened by a high level of bank obligations, which the company
substantially reduced in 2010. The company said it expects to
fully resolve the balance of its outstanding loans by the end of
2011, the Manila Standard adds.
The Manila Standard notes that Benjamin Philip Romualdez,
chairman, president and chief executive, announced at a recent
board meeting that with the settlement of a majority of Benguet's
long outstanding debt, including accrued interest amounting to
P2.22 billion, the company is back in the radar screen of global
mining players.
About Benguet Corp.
Benguet Corporation (PSE:BC) -- http://www.benguetcorp.com/-- is
engaged in chromite and gold mining and production, exploration,
research and development, and water projects. The Company
explores for mines, produces and markets gold, refractory
chromite, nickel laterite ore, limestone and aggregates, and
through its subsidiaries, provides eco-tourism, engineering and
construction, reforestation, trucking and warehousing services,
sells industrial equipment and supplies, develops water resources
and real estate projects.
* * *
Jaime F. Del Rosario at Sycip Gorres Velayo and Co. raised
significant doubt on Benguet Corporation's ability to continue as
a going concern saying that the group has incurred cumulative
losses of PHP4.8 billion and PHP4.3 billion in 2008 and 2007,
respectively, which resulted to a capital deficiency of PHP1.6
billion and PHP1.3 billion as of December 31, 2008, and 2007,
respectively. The Group's current liabilities exceeded its
current assets by PHP3.8 billion and PHP3.1 billion as of Dec. 31,
2008 and 2007, respectively. In addition, the Group was unable to
pay its maturing bank loans and related interests of PHP3.6
billion and PHP3.1 billion as of December 31, 2008 and 2007,
respectively.
=================
S I N G A P O R E
=================
ESLONG TRADING: Court to Hear Wind-Up Petition on February 18
-------------------------------------------------------------
A petition to wind up the operations of Eslong Trading Pte Ltd
will be heard before the High Court of Singapore on February 18,
2011, at 10:00 a.m.
United Overseas Bank Limited filed the petition against the
company on January 25, 2011.
The Petitioner's solicitors are:
Rajah & Tann LLP
9 Battery Road
#25-01 Straits Trading Building
Singapore 049910
HEALTHCARE SUPPLY: Court Enters Wind-Up Order
---------------------------------------------
The High Court of Singapore entered an order on January 25, 2011,
to wind up Healthcare Supply Chain (Pte) Ltd's operations.
Roche Diagnostics Asia Pacific Pte Ltd filed the petition against
the company.
The company's liquidators are:
Chan Kum Kit
Tan Mui Sang
Verify Partners
180 Paya Lebar Road
#07-07 Yi Guang Building
Singapore 409032
INVESTMON SINGAPORE: Creditors' Proofs of Debt Due March 10
-----------------------------------------------------------
Creditors of Investmon Singapore Ptd. Ltd, which is in voluntary
liquidation, are required to file their proofs of debt by
March 10, 2011, to be included in the company's dividend
distribution.
The company's liquidators are:
Chee Yoh Chuang
Eu Chee Wei David
c/o 8 Wilkie Road
#03-08 Wilkie Edge
Singapore 228095
SINO-ENVIRONMENT TECHNOLOGY: Creditors' Meeting Set for Feb. 25
---------------------------------------------------------------
Sino-Environment Technology Group Limited, which is under judicial
management, will hold a meeting for its creditors on February 25,
2010, at 10:00 a.m.
The company's Judicial Manager is:
Ms. Ee Meng Yen Angela
Ernst & Young LLP
One Raffles Quay
North Tower, Level 18
Singapore 048583
SINO-ENVIRONMENT TECHNOLOGY: Creditors' Proofs of Debt Due Feb. 23
------------------------------------------------------------------
Creditors of Sino-Environment Technology Group Limited, which is
in judicial management, are required to file their proofs of debt
by February 23, 2011, to be included in the company's dividend
distribution.
The company's Judicial Manager is:
Ms. Ee Meng Yen Angela
Ernst & Young LLP
One Raffles Quay
North Tower, Level 18
Singapore 048583
=============
V I E T N A M
=============
HOANG ANH: Fitch Assigns 'B' Long-Term Issuer Default Rating
------------------------------------------------------------
Fitch Ratings has assigned 'B' Long-term foreign currency and
local currency Issuer Default Ratings to Vietnam's largest listed
real estate developer, Hoang Anh Gia Lai JSC. The Outlook for
both ratings is Stable.
HAGL's ratings are constrained by its large capex plans of over
USD400m until the end of 2013. The company plans to diversify
away from its established, but volatile, residential property
development business in Vietnam into hydropower generation, iron
ore mining and rubber plantations in Vietnam, Cambodia and Laos.
This concern is heightened by the company's high funding costs,
with current interest costs of 16% to 17% per annum on its
existing floating rate Vietnamese dong denominated loans,
reflecting the current high interest rate environment in Vietnam.
Furthermore, there are execution risks in the planned expansion as
the company has a limited track record in the new businesses which
face material regulatory risks. For instance, the Vietnamese iron
ore mining rights need to be renewed every three years, and the
company has yet to secure many of the mining rights and an export
quota. In the hydropower sector, Fitch notes that independent
power generation in Vietnam is still in its infancy, and there is
a limited track record of pricing mechanisms, power purchase
agreements and on-time payments by the state utility.
However, Fitch notes that HAGL has taken steps to address many of
these risks. It has plans for a US dollar denominated offshore
debt funding, which, if successful, will lower its funding costs
and improve its debt maturity profile. Furthermore, the company
has recently sold new shares and minority stakes in operating
subsidiaries to raise capital. The company also maintains high
cash balances and undrawn committed facilities to manage liquidity
risks.
There is also significant flexibility in its capex plans to
reduce, delay and/or cancel projects as they are modular. For
instance, its expansion into hydropower involves 17 distinct
projects, with an average planned capacity of 27 megawatts.
Furthermore, many of its projects are being executed with in-house
project management and construction know-how, where it has a
proven track record in its property development business. In
addition, the company has begun selling iron ore domestically at
prices not materially lower than international prices less export
taxes and transportation costs, suggesting that this venture can
be profitable even without exports.
The ratings are also supported by HAGL's established residential
property development business, which focuses on the mid-tier
market in Ho Chi Minh City. The company has a sufficient land
bank for proposed projects over the next five years. This land
was acquired at materially lower costs than current market value,
which in addition to the reliance on in-house construction, allows
for high profit margins. Liquidity risks are relatively low as
most of the development costs are funded via pre-sales. In
addition, the company has demonstrated a track record of pricing
competitively to ensure high take-up rates. For instance, it
reduced selling prices by up to 40% to generate sales during the
property market downturn in 2008 and 2009. Despite this, the
company was able to generate a reasonable level of profitability
due to its low costs.
The Stable Outlook reflects Fitch's expectation that cash flows
from property development would be sufficient to cover funding
costs during HAGL's expansion phase until the end 2013. Fitch
expects the company's funds from operations interest coverage to
range between 2x to 3x during this period. Negative rating
actions could be taken if the company's FFO interest coverage is
sustained below 2x and/or if the company does not scale back its
capex without securing longer term lower cost funding. A positive
rating action is not envisaged until the new ventures contribute
to at least half of total operating profits and generate
sufficient FFO to sustainably provide 2.5x coverage of interest.
===============
X X X X X X X X
===============
* Moody's: Defaults and Recoveries Underscore Severity of Crisis
----------------------------------------------------------------
The incidents of defaults among financial institutions during the
recent financial crisis was unprecedented, according to Moody's
latest annual analysis of defaults and recoveries.
The period 2008-2010 saw 111 financial companies default,
including 72 debt issuers holding $318 billion of bonds and loans
in the 2008-2010 period.
By comparison, there were only 96 defaults, affecting $46 billion
of debt, of Moody's-rated financial companies in the period 1983
-- 2007. Of these, 36 defaults took place during the U.S. Savings
and Loans Crisis of 1989-1991, affecting $6 billion of debt.
"Historically, defaults in the financial sector were fairly low
except during the Savings and Loan crisis," says Sharon Ou,
Assistant Vice President at Moody's Investors Service who authored
the report. "Financial institution defaults during the recent
crisis were unprecedented both in number and volume."
The default rate for all Moody's-rated financial institutions rose
sharply during 2008-2009 and reached its cyclical peak of 2.7% in
August 2009, according to the Moody's report. It surpassed the
previous record of 2.3% set during the Savings & Loan Crisis.
While relatively fewer financial institutions are speculative
grade, among those firms the default rate topped out at 11.5%
during the recent crisis, below the 1989-1991 peak of 19.5% when
there were far fewer speculative-grade-rated financial issuers.
In addition to being at unprecedented levels, defaults during the
recent crisis have also been more globally distributed. During
the crisis more than half of the financial institutions that
defaulted were located in Europe, a region that historically had
seen very few financial institution defaults.
Specifically, during the past three years 56% of defaults have
been located in Europe, compared to only 6% before 2008. About
half the recent defaults were Ukrainian banks, which imposed
deposit freezes in October 2008. In contrast to Europe, North
America saw its share drop to only 37% in this cycle relative to
79% before 2008.
The recent financial crisis also saw a unique phenomenon in credit
differentiation among various classes of debt, which was in part
due to different levels of support governments offered to senior
debt liabilities versus junior ones.
Recovery rates on defaulted bonds during the crisis have held up
surprisingly well, boosted by 15 distressed exchanges. For
example, the average recovery rate for senior unsecured bonds has
been 35.2% during 2008-2010, which is just slightly off the 1983-
2007 average of 39.4%. Financial institutions engaged in
distressed exchanges during the recent crisis, which propped up
the recovery rate.
Looking into 2011, Moody's Credit Transition Model (CTM), which
forecasts rating transitions, predicts that the default rate among
speculative-grade financial institutions which issue debt will
stabilize under the baseline economic scenario to a range of 1.5%
- 3.0%. Under a more pessimistic scenario, CTM forecasts the
default rate rebounding from its current 3.0% level to 6.5%.
Available on Moodys.com "Defaults and Recoveries for Financial
Institution Debt Issuers, 1983-2010" documents the default,
recovery and rating transitions of Moody's-rated financial
institutions since 1983.
* Moody's: Global Default Rate Falls to 2.8% in January
-------------------------------------------------------
The trailing 12-month global declined to 2.8% in January, down
from its revised 3.2% level in December, according to Moody's
Investors Service in its monthly default report. A year ago,
the global default rate stood dramatically higher at 12.6%.
No Moody's-rated corporate debt issuer defaulted in January, the
first time there has been no default during a month since June
2007. By comparison, there were eight defaults in January 2010.
"We continue to expect stable, low default rates for the near
future," said Albert Metz, Moody's Director of Credit Policy
Research. "Default rates would move upwards, however, should
financing become scarce, particularly in Europe."
Moody's forecasting model predicts that the global speculative-
grade default rate will decline to 1.5% by January 2012. The
model did a satisfactory job in projecting the rise and fall in
default rates during the most recent credit cycle. For example,
the model anticipated at the beginning of last year that the
global default rate would fall sharply to 3.3% by year end and the
actual rate came in at 3.2%.
By region the model says the default rate will decline to 1.7%
among U.S. speculative-grade issuers and to 1.1% among European
speculative-grade issuers.
By industry, Moody's expects default rates to be highest in the
Hotel, Gaming, & Leisure sector in the U.S. and the Media:
Advertising, Printing & Publishing sector in Europe.
In the U.S., the speculative-grade default rate edged lower in
January, to 3.0% from the revised December level of 3.4%. At this
time a year ago, the U.S. default rate stood 13.7%.
In Europe, the default rate among speculative-grade issuers was
2.3% in January, unchanged from the revised level for December. A
year ago, the European default rate was at 10.5%.
When measured on dollar volume basis, the global speculative-grade
bond default rate remained unchanged at 1.6% from December to
January. A year ago, the global dollar-weighted default rate
stood at 16.4%.
In the U.S., the dollar-weighted speculative-grade bond default
rate ended January at 1.5%, down slightly from 1.6% in December.
The same rate was 16.8% in January 2010.
In Europe, the dollar-weighted speculative-grade bond default rate
was 1.9% in January, unchanged from its revised level for
December. At this time last year, the rate was 12.2%.
Moody's speculative-grade corporate distress index -- a measure of
the percentage of high-yield issuers that have debt trading at
distressed levels -- fell from December's level of 10.5% to 8.6%
in January. A year ago, the index was higher at 19.4%.
Among U.S. leveraged loans, the trailing 12-month default rate
fell from 2.8% in December to 2.5% in January. A year ago, the
loan default rate was 11.5%.
Moody's "January Default Report" is now available, as are Moody's
other default research reports, in the Rating Analytics section of
http://Moodys.com/
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. Valerie U. Pascual, Marites O. Claro, Joy A. Agravante,
Rousel Elaine T. Fernandez, Psyche A. Castillon, Julie Anne G.
Lopez, Ivy B. Magdadaro, Frauline S. Abangan, and Peter A.
Chapman, Editors.
Copyright 2011. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$625 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Christopher Beard at 240/629-3300.
*** End of Transmission ***