/raid1/www/Hosts/bankrupt/TCRAP_Public/121001.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, October 1, 2012, Vol. 15, No. 195
Headlines
A U S T R A L I A
GOODMAN GRP: S&P Withdraws BB+ Rating on A$327MM Preferred Units
GUNNS LTD: Shareholders Likely to Lose All Money, Receiver Says
LIBERTY FUNDING: Moody's Assigns 'Ba2' Rating to Class D Notes
MIRABELA NICKEL: S&P Affirms 'CCC+' Rating on US$395MM Bonds
C H I N A
BRIGHT FOOD: S&P Assesses 'bb+' Stand-alone Credit Profile
CHINA GLASS: Moody's Withdraws 'B1' Corporate Family Rating
SUNAC CHINA: S&P Affirms 'BB-' Corp. Credit Rating; Outlook Neg
TEXHONG TEXTILE: S&P Affirms 'BB-' Corporate Credit Rating
* CHINA: Moody's Sees Moderate Recovery for Property Developers
H O N G K O N G
AGFA MATERIALS: Commences Wind-Up Proceedings
ASAHI BREWERIES: Commences Wind-Up Proceedings
AVIATION MANAGEMENT: Members' Final Meeting Set for Oct. 22
CITIZENS TRADE: Members' Final Meeting Set for Oct. 22
EAST GATE: Members' Final Meeting Set for Oct. 22
FANTASIA HOLDINGS: Moody's Rates US$250MM Sr. Unsec. Notes 'B2'
FC PACKAGING: Members' Final Meeting Set for Oct. 22
GENDA ENTERPRISE: Creditors' Meeting Set for Oct. 11
GENDA INTERNATIONAL: Creditors' Meeting Set for Oct. 11
HK ASSOCIATION: Members' Final Meeting Set for Oct. 12
MERRY PEACE: Creditors' Proofs of Debt Due Oct. 29
MILLION METRO: Commences Wind-Up Proceedings
OVAL ENTERPRISES: Members' Final Meeting Set for Oct. 22
REGENT BONUS: Members' Final Meeting Set for Oct. 22
SECURED FINANCIAL: Members' Final Meeting Set for Oct. 22
SHARP UNITED: Creditors' Proofs of Debt Due Oct. 24
STACA INTERNATIONAL: Members' Final Meeting Set for Oct. 24
I N D I A
AADHI CARS: ICRA Rates INR7.5cr Loans at '[ICRA]B'
BALAJI COTEX: CRISIL Rates INR60MM Cash Credit at 'CRISIL B'
DICITEX HOME: Delays in Loan Payment Cues Junk Ratings
INDEX SUPPLIERS: CRISIL Cuts Rating on INR85MM Loans to 'D'
LANCO SOLAR: ICRA Assigns '[ICRA]B+' Rating to INR150cr Loans
LEATHER TECH: CRISIL Cuts Rating on INR1MM Loan to 'CRISIL B-'
LML LIMITED: ICRA Reaffirms Junk Ratings on INR125cr Loan
MINDA CORP: Delays in Loan Payment Cue ICRA Junk Ratings
OCEANIC EDIBLES: Delays in Loan Payment Cue CRISIL Junk Ratings
SABER PAPER: Delay in Loan Payment Cues CRISIL Junk Ratings
S. R. COTTON: ICRA Upgrades Rating on INR60MM Loan to 'B+'
I N D O N E S I A
ANTAM (PERSERO): S&P Affirms 'B+' Corporate Credit Rating
BERAU COAL: S&P Affirms 'BB-' Corp. Credit Rating; Outlook Neg.
BUMI RESOURCES: Moody's Revises Outlook on 'B1' CFR to Negative
BUMI RESOURCES: S&P Cuts Corporate Credit Rating to 'B+'
J A P A N
ELPIDA MEMORY: Bondholders Fight for Court Liaison Appointment
OLYMPUS CORP: Sony to Buy 11.46% Stake in Olympus
SHARP CORP: Lenders to Provide JPY360 Billion in New Loans
SHARP CORP: To Withdraw Solar Battery Biz in U.S. and Europe
K O R E A
WOONGJIN HOLDINGS: Drops Plan to Sell $1.1B Stake in Coway Unit
N E W Z E A L A N D
MARAC INSURANCE: S&P Gives 'BB+' Financial Strength Rating
S I N G A P O R E
3Q INTERIOR: Court to Hear Wind-Up Petition Oct. 5
ABLTRON (S): Court to Hear Wind-Up Petition Oct. 12
BORDERS PTE: Creditors' Proofs of Debt Due Oct. 8
CHINA FOODZART: Court to Hear Wind-Up Petition Oct. 12
EW JUBILEE: Creditors' Proofs of Debt Due Oct. 29
PACNET LTD: Fitch Affirms 'B+' IDR; Outlook Negative
V I E T N A M
* S&P Lifts Counterparty Credit Ratings on 3 Vietnam Banks to BB-
- - - - -
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A U S T R A L I A
=================
GOODMAN GRP: S&P Withdraws BB+ Rating on A$327MM Preferred Units
----------------------------------------------------------------
Standard & Poor's Ratings Services said its ratings and outlook
on Goodman Group (GMG, BBB/Stable/--) were unaffected by the
group's announcement that it had amended the terms and conditions
of the AUD327 million Goodman PLUS Trust step-up perpetual non-
cumulative preference units. "Following the amendments, we have
withdrawn the 'BB+' issue rating on Goodman PLUS Trust. These
subordinated hybrid instruments were assigned intermediate equity
credit when they were first issued on Nov. 15, 2007. We believe
that the amendments to the PLUS terms will not change our
treatment of these securities as an intermediate equity
instrument within GMG's capital structure," S&P said.
The rating on Australia-based GMG reflects S&P's opinion of the
group's "satisfactory" business risk profile, which is supported
by its solid Australasian market position; established presence
in Europe, and growing position in Asia; stable rental income;
and track record of accessing third-party capital to expand and
support its investment and funds-management activities. These
strengths are tempered by S&P's view of the group's
"intermediate" financial risk profile and exposure to more-
volatile property-development earnings. The group has relatively
high levels of look-through debt that are dependant on GMG
divesting its equity stakes or reducing gearing in its
cornerstone investments to target levels. This could be a
challenge because of relatively soft market conditions,
particularly in the European region.
GUNNS LTD: Shareholders Likely to Lose All Money, Receiver Says
---------------------------------------------------------------
Australian Associated Press reports that one of the receivers of
Gunns Ltd said it is likely that shareholders of the collapsed
Tasmanian woodchipper will lose all of their money.
Receiver Mark Korda of KordaMentha was asked on the ABC's Inside
Business program on Sunday if shareholders in Gunns had lost all
their money, according to AAP.
"Um, my prognosis is 'yes'," Mr. Korda replied, AAP relays.
According to AAP, Mr. Korda said any money that Gunns had would
first go towards meeting the cost of running the administration,
then employees' entitlements, followed by secured creditors and
unsecured creditors.
The report relates that Mr. Korda said the big issue for Gunns at
the moment was that it was running out of cash.
AAP adds that Mr. Korda said several things had contributed to
the demise of Gunns, including an oversupply of woodchips and a
collapse in woodchip prices; an "enormous" amount of money spent
on the research and development of a proposed $2.3 billion pulp
mill at Bell Bay in Tasmania; and the high value of the
Australian dollar.
Gunns, whose shares have been suspended from trading on the
Australian Securities Exchange since March, made a AUD904 million
net loss in 2011/12, AAP discloses.
About Gunns Limited
Based in Launceston, Australia, Gunns Limited (ASX:GNS) --
http://www.gunns.com.au/-- is an hardwood and softwood forest
products company. It operates within three segments: Forest
products, Timber products and Other activities. Gunns has about
645 employees in Tasmania, Victoria, South Australia and Western
Australia. Gunns Plantations Limited (GPL) is a Responsible
Entity that manages 21 registered agricultural Managed Investment
Schemes (MIS) on behalf of investors (growers).
On Sept. 25, 2012, the directors of Gunns Limited and its 35
entities, and the responsible entity of Gunns Plantations Limited
appointed Ian Carson, Daniel Bryant and Craig Crosbie of PPB
Advisory as Voluntary Administrators.
KordaMentha has also been appointed Receivers and Managers.
LIBERTY FUNDING: Moody's Assigns 'Ba2' Rating to Class D Notes
--------------------------------------------------------------
Moody's Investors Service has assigned definitive ratings to
notes issued by Liberty Funding Pty Ltd in respect of Liberty
Series 2012-1 Auto.
Issuer: Liberty Series 2012-1 Auto
AUD108.75 million Class A Notes, Assigned Aaa (sf);
AUD22.50 million Class B Notes, Assigned A1 (sf);
AUD6.75 million Class C Notes, Assigned Baa1 (sf);
AUD8.25 million Class D Notes, Assigned Ba2 (sf);
The AUD3.75 million Class E Notes are not rated by Moody's.
The subject transaction is an Australian ABS. It is a cash
securitization of auto loans extended to prime and non-conforming
consumer obligors located in Australia and secured by motor
vehicles. This is Liberty Financial's sixth auto ABS transaction.
Ratings Rationale
In broad terms, Liberty Series 2012-1 Auto replicates structures
seen in previous transactions sponsored by Liberty Financial.
Notable features of the transaction include the presence of a
prefunding period, a credit reserve funded initially at 3% of the
outstanding note balance and the use of a two-tiered funding
structure.
The transaction includes a prefunding period, whereby Liberty
Funding will issue notes up to AUD150 million, based on the
initial pool of AUD113.85 million. During the three month
prefunding period Liberty will originate loans up to the
prefunding amount of AUD33.14 million, which will be sold into
the trust.
The reserve account is initially funded at AUD4.5 million or 3%
of the aggregate initial note balance. The account traps excess
spread until it reaches 10% of the current outstanding note
balance. Once it reaches 10% it will amortise to remain at 10% of
the current outstanding balance of notes until it reaches a floor
of AUD2.25 million. The reserve account will be available to meet
losses on the loans and charge-offs against the notes. In
addition, it can also be used to cover any liquidity shortfalls
that remain uncovered after drawing on the liquidity reserve and
principal.
Liberty has utilised a two-tier structure whereby the notes
issued by Secure Funding as trustee of the trust are initially
subscribed to by Liberty Funding, another Special Purpose
Vehicle. Liberty Funding will then issue notes (contemplated
above), identical to the notes they have subscribed to. Secure
funding will pass through all income in accordance with the
income and principal waterfalls it is governed by, with Liberty
Funding distributing funds to noteholders.
The pool includes a 19.88% exposure to non-conforming obligors,
albeit lower than in previous Liberty sponsored transactions.
This is change is reflective of Liberty's move towards
originating higher volumes to prime obligors. Moody's considers
non-conforming obligors to have a higher level of risk than prime
obligors and this is a negative feature of the transaction. At
the same time, the deal is secured exclusively by cars,
predominantly passenger vehicles. Motor vehicles exhibit less
pro-cyclical default patterns and, on average, higher recovery
rates.
In order to fund the purchase price of the portfolio, the Trust
will issue 5 classes of notes. The notes will be repaid on a
sequential basis in the initial stages until the subordination
percentage increases from the initial 27.5% to 55% (excluding
credit reserve) and during the tail end of the transaction. The
structure will follow a pro rata repayment profile, subject to
satisfaction of step down criteria. The Class E Notes do not step
down.
The ratings are based on the credit enhancement provided by the
subordinated notes and the credit reserve, in total equal to
30.5% for the Class A Notes.
Moody's base case assumptions are a default rate of 8.50% and a
recovery rate of 35%. These imply an expected (net) loss of
5.53%. Both the default rate and the recovery rate have been
stressed relative to observed historical levels of 7.63% and 47%
respectively.
The ratings address the expected loss posed to investors by the
legal final maturity. The structure allows for timely payment of
interest and ultimate payment of principal by the legal final
maturity.
Volatility Assumption Scores and Parameter Sensitivities
The V Score for this transaction is Medium/High, which is higher
than the score assigned for the Australian auto ABS sector - this
transaction has been benchmarked to the prime auto ABS sector,
given the majority of obligors have no current adverse credit
history, however the expected loss assumption is significantly
higher than the peer group. Moody's has assigned performance
variability Medium/High; while the rating agency has been
provided with detailed vintage and individual default data for
the 2000 to 2012 period,
Liberty's historical origination patterns differ significantly
compared to the pool composition -- the majority of loss vintages
relate to periods where origination was skewed towards non-
conforming obligors. Moody's observes that Australian auto ABS,
and specifically past Liberty transactions, have to date been
performing stably. With regards to legal and regulatory
uncertainty, Moody's assigns a medium due to the recent
introduction of the Personal Property Securities Act (PPSA) which
may lead to operational issues in the short term. Overall, the V
score of Medium/High indicates there is a higher possibility of
deviation in performance, relative to peer portfolios.
V Scores are a relative assessment of the quality of available
credit information and of the degree of uncertainty around
various assumptions used in determining the rating. High
variability in key assumptions could expose a rating to more
likelihood of rating changes. The V Score has been assigned
accordingly to the report "V Scores and Parameter Sensitivities
in the Asia/Pacific RMBS Sector", published in March 2009.
Parameter Sensitivities are designed to provide a quantitative
calculation of how the initial rating might change if key input
parameters used in the initial rating process - here, the
expected loss and the Aaa credit enhancement - differed. The
analysis assumes that the deal has not aged. Parameter
Sensitivities only reflect the ratings impact of each scenario
from a quantitative/model-indicated standpoint.
In the case of Liberty Series 2012-1 Auto, the model indicated
rating for the Class A Notes remains investment grade (5 notch
downgrade to A2) when the default rate rises to 12.75% and the
recovery rate is halved to 17.50%. The model indicated rating for
the Class B Notes drops 7 notches to Ba2 in the above scenario.
Rating Methodology
The principal methodology used in this rating was "Moody's
Approach to Rating Australian Asset-Backed Securities" published
in July 2009.
MIRABELA NICKEL: S&P Affirms 'CCC+' Rating on US$395MM Bonds
------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Mirabela Nickel Ltd. to stable from negative. "We also affirmed
the 'CCC+' issuer credit rating on the company, 'CCC+' issue
rating on the company's US$395 million bonds due 2018, and issue
recovery rating of '4'. Mirabela is an Australia-based nickel
miner with operations in Brazil," S&P said.
"The outlook revision reflects our view that Mirabela has removed
potentially high liquidity pressure in early 2013 with its US$120
million equity raising in June 2012 and recent improvements in
key operating ratios. The company has to repay US$25 million of
its working capital facility in early next year. Although the
immediate risks have been removed, the company's current cash
costs constrain the ratings and will cause its cash flow deficits
to continue in the short term," said Standard & Poor's credit
analyst Thomas Jacquot.
"Mirabela's first-half ended June 30, 2012 results have
significantly improved. Cash costs dropped during the period to
US$6.68, or about 10% below the corresponding period in 2011. A
number of cost-saving measures and Mirabela's internalization of
some mining activities have boosted the results. Furthermore,
better ore grades and early signs of the benefits from its
recently completed upgrade works have contributed to the improved
figures. Although realized nickel prices were more than US$8 per
pound for the first-half, prices recently fell to about US$6.80,
though they have recovered since to about US$8. The volatility in
nickel prices underscores the importance for Mirabela to rein its
cash costs," S&P said.
"Indeed, we believe that Mirabela's cash costs could reduce
further. As the company's desliming plant becomes fully
operational, it should improve nickel recovery. We note, however,
that Mirabela's large production costs will remain exposed to
exchange rates as they are denominated in Brazilian real. We also
believe that operating costs could fluctuate quarterly, until the
company has established a strong track record. As a result, we
have assumed in our forecasts that Mirabela's cash costs will
remain at about US$6 per pound into 2013. We also expect the
company will spend no more than US$20 million in capital
expenditure, including stay-in-business capital expenses and
exploration costs primarily for the purpose of tenement
maintenance. Our forecast further assumes nickel prices reaching
US$7.50 for the second half of 2012, before increasing to US$8 in
2013. Nevertheless, we believe nickel prices would remain
volatile in the coming months, similar to trends affecting a
number of commodities," S&P said.
Mr. Jacquot added: "The stable outlook reflects our opinion that
the company has sufficient liquidity to support its operating
expenditure and financing requirements. We expect the company
will continue improving its operations toward a more sustainable
cash cost level, even if nickel prices were to persist at less
than US$7 per pound during the next 12 months. The outlook is
further reflective of the completion of the processing plant
upgrade works and the progress of the desliming plant toward full
production, with positive results to date."
"The rating is likely to be higher within the next 12 months once
the company sustains surplus free operating cash flow, even if
nickel prices become depressed or the exchange rate is
unfavorable. We would need to see Mirabela's cash costs reducing
to the range of US$5.50 to US$5.75 on a sustained basis, while
liquidity continues to remain adequate, for the rating to be
higher," S&P said.
"Given Mirabela's large cash balance, we believe there is limited
downward pressure on the rating in the near term," S&P said.
=========
C H I N A
=========
BRIGHT FOOD: S&P Assesses 'bb+' Stand-alone Credit Profile
----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BBB-' long-term
corporate credit rating to Bright Food (Group) Co. Ltd., a
Shanghai-based food conglomerate. The outlook is stable. "At the
same time, we assigned our 'cnA-' long-term Greater China
regional scale rating to the company," S&P said.
"The rating on BFG reflects the company's stand-alone credit
profile (SACP) of 'bb+' and our expectation of a 'moderately
high' likelihood that Shanghai's municipal government will
provide sufficient and timely extraordinary support to the
company in the event of financial distress. The SACP reflects the
company's 'satisfactory' business risk profile and its
'significant' financial risk profile, as our criteria define
these terms," S&P said.
"BFG benefits from the diversification of its businesses and a
higher exposure to the more stable and non-cyclical consumer
staples segment," said Standard & Poor's credit analyst Lillian
Chiou. "The company also has strong market positions in several
business segments and numerous well-established food and food-
related brands."
BFG is exposed to the risk of geographic concentration in
Shanghai, particularly for its agricultural business. The
company's large national sales and distribution channels and
overseas expansion somewhat temper this risk.
"In our opinion, BFG has been pursuing an aggressive growth
strategy through acquisitions, which exposes it to high execution
risks. We believe the company's management has been able to
cherry pick acquisition targets in the past to boost
profitability or expand revenues. This has partially offset
integration risks, particularly from a recent acquisition of
Weetabix Food Co. (not rated). However, such debt-funded
acquisitions have weighed on BFG's capital structure. We do not
expect the company's capital structure to improve materially in
the next 12 months due to its weak profitability," S&P said .
"Based on our government-related entity criteria, our assessment
of a 'moderately high' likelihood of extraordinary government
support is based on 'very strong' link with, and 'limited
importance' to, the government. The company's high financial
leverage and weak cash flows are counterbalanced by its superior
access to the domestic capital market due to its close
relationship with the Shanghai government," S&P said.
"We assess the credit profile of the Shanghai municipal
government to be stronger than BFG's SACP. Our view reflects
Shanghai's strong liquidity position and healthy fiscal
performance that benefits from the city's strong economic growth
and diversified economic base, as well as the high likelihood of
extraordinary support from the central government of China (AA-
/Stable/A-1+, cnAAA/cnA-1+). Shanghai's heavy debt burden and
lack of fiscal transparency partly offset these strengths," S&P
said.
"The stable outlook reflects our expectation that BFG's margins
will stabilize and improve over the next 12 months and that the
company will maintain its diversified operations and high
exposure to less-cyclical consumer staples," said Ms. Chiou. "We
also expect the company to continue its balanced expansion and
maintain its leading market positions."
"We could raise the rating if BFG: (1) sustainably improves its
profit margin; (2) maintains good cash flows and liquidity; and
(3) keeps financial discipline while pursuing acquisitions. An
upgrade trigger could be a ratio of total debt to EBITDA of less
than 4.5x or a ratio of funds from operations (FFO) to debt of
more than 20% on a sustained basis. In a less likely scenario, we
could also upgrade the company if we raise our credit assessment
of the Shanghai municipal government due to better transparency,
or if government support for BFG is stronger than we currently
assess based on an increase in the company's importance to the
government," S&P said.
"We could lower the rating if the improvements in BFG's sales and
margins are weaker than we expected or the company undertakes
debt-funded acquisitions that are more aggressive than
anticipated. A downgrade trigger could be the ratio of total debt
to EBITDA approaching 6.0x or the FFO-to-debt ratio falling to
and remaining at less than 15%. We could also lower the rating on
BFG if the creditworthiness of the Shanghai municipal government
deteriorates or the level of extraordinary support from the
government is weaker than we currently assess. We view both these
scenarios as remote," S&P said.
CHINA GLASS: Moody's Withdraws 'B1' Corporate Family Rating
-----------------------------------------------------------
Moody's Investors Service has withdrawn its B1 corporate family
rating with a negative outlook on China Glass Holdings Limited.
Moody's has withdrawn the rating for its own business reasons.
China Glass Holdings Ltd is publicly listed in Hong Kong and is
the second largest float glass manufacturer in China in terms of
capacity, with 17 production lines across the country. The float
glass it produces is used largely in the construction industry.
SUNAC CHINA: S&P Affirms 'BB-' Corp. Credit Rating; Outlook Neg
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB-' long-term
corporate credit rating on China-based property developer Sunac
China Holdings Ltd. The outlook is negative. "We also lowered the
long-term Greater China regional scale rating on Sunac to 'cnBB'
from 'cnBB+' to draw it in line with the negative rating outlook.
We removed all the ratings from CreditWatch, where they had been
placed with negative implications on June 26, 2012," S&P said.
"We affirmed the rating to reflect our view that Sunac is likely
to maintain its good sales execution over the next 12 months.
This should lead to stronger revenue recognition and EBITDA that
would create a buffer for the company's high leverage," said
Standard & Poor's credit analyst Bei Fu.
"Sunac is likely to maintain its sales momentum over the next
year despite market uncertainty, in our opinion. The company's
property sales grew 70.8% year over year to Chinese renminbi
(RMB) 16.24 billion in the first eight months of 2012. Sales were
54.1% of Sunac's upwardly revised full-year target. The company's
operating scale has become larger than that of most similarly
rated peers following several large acquisitions earlier this
year," S&P said.
"We expect Sunac to maintain its aggressive expansion and growth
appetite over the next two years. The company's corporate
structure could become more complex during this time because it
does not consolidate some of the projects. We expect substantial
cash flow movements between Sunac and these entities. However,
timely disclosure of information could become a risk factor," S&P
said.
"The negative outlook reflects our expectation that Sunac's
business expansion will remain aggressive and that its liquidity
could come under pressure in the next 12 months if sales slip,"
said Ms. Fu. "Larger-than-expected acquisitions that entail
significant debt funding and assumption of project debt will put
pressure on liquidity."
"We may lower the rating if: (1) Sunac's borrowings are
significantly more than we expect without strong property sales
performance to offset the higher debt, such that its debt-to-
EBITDA ratio is more than 5x or EBITDA interest coverage is less
than 3x; or (2) the company's property sales, including newly
acquired projects, are materially below our expectations," S&P
said.
"We could revise the outlook to stable if: (1) Sunac's management
demonstrates a somewhat disciplined financial management as it
pursues growth; (2) the company's contract sales remain good amid
a market correction, including in its newly acquired projects;
and (3) its liquidity materially improves," S&P said.
TEXHONG TEXTILE: S&P Affirms 'BB-' Corporate Credit Rating
----------------------------------------------------------
Standard & Poor's Ratings Services revised the rating outlook on
Texhong Textile Group Ltd., a China-based textile company, to
stable from negative. "At the same time, we affirmed our 'BB-'
long-term corporate credit rating on the company and our 'BB-'
issue rating on the company's US$200 million senior unsecured
notes due 2016. We also raised our long-term Greater China
regional scale rating on Texhong and its outstanding senior
unsecured notes to 'cnBB+' from 'cnBB' to move them in line with
the stable rating outlook on Texhong," S&P said.
Standard & Poor's revised the outlook to reflect its expectation
that Texhong's aggressive financial risk profile will continue to
improve.
"Texhong's ratio of total debt to EBITDA declined to about 2.7x
in the first half of 2012 from 5.1x in 2011, moving the company
further away from our downgrade threshold of 3.5x. In our view,
despite the uncertainty in the global economy, the company's
profitability and cash flow protection measures will strengthen
over the next year because of stabilizing cotton prices and the
current wide price differential between cotton selling prices in
the U.S. and China," said Standard & Poor's credit analyst Joe
Poon.
"Texhong's financial risk profile reflects our view of the
company's debt-funded expansion to date, its short track record
of improving its financial metrics, and tight headroom for one of
its financial covenants as of June 30, 2012. Nevertheless, the
company's results in the first half of 2012 were substantially
better than we expected when we lowered the corporate credit
rating to 'BB-' in March 2012," S&P said.
"We have revised our base-case projections for 2012. We now
expect the company's ratio of total debt to EBITDA to be about
2.5x, compared with 3.0x previously. Texhong's financial health
has strengthened primarily because of stabilizing cotton prices
since the second half of 2011 and the wide differential between
onshore and offshore cotton prices. Further, the company has been
able to restore profitability due to better inventory control and
expanded capacity in Vietnam after it completed expansion in the
south of the country," S&P said.
"The uncertain global economic outlook and volatility in cotton
prices demonstrated how vulnerable Texhong's business can be
during industry downturns, which underpins our assessment that it
has a 'weak' business risk profile. In our opinion, Texhong still
faces execution risk from its ongoing expansion in northern
Vietnam. The company is increasingly subject to country risk in
Vietnam, given that about 40% of its capacity is based there as
of
June 30, 2012; this proportion should later increase to about
50%. However, the company's good niche market position in core-
spun yarns and the cost advantage of its Vietnam operations
temper these weaknesses," S&P said.
"The affirmed rating also reflects our view of Texhong's narrow
product range, lower profitability than that of peers in the 'BB-
' rating category, and the competitive and fragmented nature of
the textile industry. The company's good niche market position in
core-spun yarns, stable cash flows, and a proactive and flexible
management team temper these weaknesses. Texhong's steady growth
profile, driven by its expansion in Vietnam and above-average
operating efficiency, is an additional supporting factor," S&P
said.
"The stable outlook reflects our expectation that Texhong can
continue to improve profitability and restore its financial
strength over the next 12 months," said Mr. Poon.
"We could lower the rating if the financial risk profile
deteriorates materially because Texhong engages in large debt-
funded expansion, cotton prices fluctuate for a prolonged period,
or demand is weak. Downgrade triggers are an adjusted ratio of
total debt to EBITDA that exceeds 4.5x and a ratio of FFO to debt
that drops to below 15% on a sustained basis," S&P said.
"The upside to the rating is currently limited due to Texhong's
high susceptibility to volatile cotton prices. We could raise the
rating if the company can demonstrate good execution of its
expansion plan in northern Vietnam, better stability across down
cycles, or more conservative financial policies, so that the
ratio of debt to EBITDA consistently stays below 2.0x," S&P said.
* CHINA: Moody's Sees Moderate Recovery for Property Developers
---------------------------------------------------------------
Moody's Investors Service says in the second edition of its
"China Property Focus" that sales in the coming months are
expected to improve, as developers launch new projects during the
traditionally peak seasons of September and October.
"The developers reported low recognized revenues in 1H 2012
because they generally deliver projects at the end of the year,"
says Franco Leung, a Moody's Assistant Vice President and
Analyst.
"Moody's expects a moderate recovery in the full-year financial
results of Moody's rated developers, as many of them have locked
in a substantial portion of their revenues for 2H 2012," adds
Leung.
According to the newsletter, the industry as a whole recorded
total contract sales in August of RMB452 billion, which was
largely unchanged from the RMB454 billion in July.
Nationwide accumulated sales for the first eight months rose 2.3%
year-on-year to RMB2.8 trillion.
The 15 developers tracked and rated by Moody's performed better,
reporting a 5.6% year-on-year increase in accumulated sales
between January and August.
"We expect these developers to continue outperforming the overall
market in the near-term," says Leung.
The number of cities registering property price declines fell to
49 in August from 54 in July because of higher demand for
properties in certain cities.
However, Moody's expects that prices will experience mild year-
on-year declines in the near-to medium-term, given that the
supply of mass market products will increase, and also because of
continuing tight government restrictions on property investments.
Twenty seven of Moody's 31 rated developers in China reported
their 1H 2012 results since the first newsletter was published in
August. These results were largely within Moody's expectations.
Nineteen of the 27 developers reported moderate declines in their
profit margins. Moody's has factored these falls into their
ratings.
Moody's Chinese Property Developers Liquidity Index shows a
deterioration to 22.6% in August, the highest level since March,
and which is higher than the 16.1% in July.
The August index was negatively affected by two developers
falling to the lowest speculative-grade liquidity score category
of SGL-4. Their weakened liquidity reflects weak contract sales
year-to-date, and/or increased refinancing needs for the near-
term.
"Moody's expects the Chinese Property Developers Liquidity Index
to further weaken in the near-term, as the liquidity of a few
small developers with weak contract sales are still under
pressure," says Leung.
Among the seven developers with liquidity difficulties (scoring
SGL-4), some have high offshore refinancing needs. Moody's
believes it will be challenging for them to raise offshore funds,
given their financial profiles and low rating levels of B or
below.
================
H O N G K O N G
================
AGFA MATERIALS: Commences Wind-Up Proceedings
---------------------------------------------
Members of Agfa Materials Hong Kong Limited, on Sept. 14, 2012,
passed a resolution to voluntarily wind up the company's
operations.
The company's liquidator is:
Fong Ming Wai Howard
Room 3704, Hong Kong Plaza
188 Connaught Road
West, Hong Kong
ASAHI BREWERIES: Commences Wind-Up Proceedings
----------------------------------------------
Members of Asahi Breweries Itochu (Holdings) Limited, on Sept.
14, 2012, passed a resolution to voluntarily wind up the
company's operations.
The company's liquidators are:
Thomas Andrew Corkhill
Iain Ferguson Bruce
8th Floor, Gloucester Tower
The Landmark
15 Queen's Road
Central, Hong Kong
AVIATION MANAGEMENT: Members' Final Meeting Set for Oct. 22
-----------------------------------------------------------
Members of Aviation Management Services Limited will hold their
final general meeting on Oct. 22, 2012, at 10:00 a.m., at Room
2102, 21st Floor, Tower Two, Lippo Centre, at 89 Queensway,
Admiralty, in Hong Kong.
At the meeting, Anthony John Jex, the company's liquidator, will
give a report on the company's wind-up proceedings and property
disposal.
CITIZENS TRADE: Members' Final Meeting Set for Oct. 22
------------------------------------------------------
Members of Citizens Trade Services Limited will hold their final
meeting on Oct. 22, 2012, at 10:30 a.m., at 602 The Chinese Bank
Building, at 61-65 Des Voeux Road, Central, in Hong Kong.
At the meeting, Wong Teck Meng, the company's liquidator, will
give a report on the company's wind-up proceedings and property
disposal.
EAST GATE: Members' Final Meeting Set for Oct. 22
-------------------------------------------------
Members of East Gate Shipping Limited will hold their final
general meeting on Oct. 22, 2012, at 10:00 a.m., at Room 2102,
21st Floor, Tower Two, Lippo Centre, at 89 Queensway, Admiralty,
in Hong Kong.
At the meeting, Anthony John Jex, the company's liquidator, will
give a report on the company's wind-up proceedings and property
disposal.
FANTASIA HOLDINGS: Moody's Rates US$250MM Sr. Unsec. Notes 'B2'
---------------------------------------------------------------
Moody's Investors Service has assigned a definitive B2 senior
unsecured rating to the US$250 million, 13.75%, 5-year senior
unsecured notes issued by Fantasia Holdings Group Co., Limited.
Fantasia's B1 corporate family rating and B2 senior unsecured
rating remain unchanged.
The ratings outlook is stable.
Ratings Rationale
Moody's definitive rating on this debt obligations confirms the
provisional (P)B2 rating assigned on September 19, 2012. The
final terms and conditions of the bond issue are consistent with
Moody's expectations. Moody's rating rationale was set out in a
press release published on the same day.
The proceeds of the bond issuance will be used to fund existing
and new property projects, refinance existing debt, and for
general corporate purposes.
The principal methodology used in rating Fantasia Holdings Group
Company Limited was the Global Homebuilding Industry Methodology
published in March 2009.
Fantasia Holdings Group Co., Limited, is a property developer
established in 1996 and listed on the Hong Kong Stock Exchange in
November 2009. As of June 2012, it had a land bank of 8.3 million
square meters of gross floor area, with land use rights, mainly
in Chengdu and the Pearl River Delta.
It develops high-end office buildings and residential properties,
targeting small- and medium-sized enterprises and affluent
individuals.
FC PACKAGING: Members' Final Meeting Set for Oct. 22
----------------------------------------------------
Members of FC Packaging Investment Limited will hold their final
meeting on Oct. 22, 2012, at 11:00 a.m., at Units 3401-2, 34th
Floor, AIA Tower, at 183 Electric Road, North Point, in Hong
Kong.
At the meeting, Mok Mun Lan Linda, the company's liquidator, will
give a report on the company's wind-up proceedings and property
disposal.
GENDA ENTERPRISE: Creditors' Meeting Set for Oct. 11
----------------------------------------------------
Creditors of Genda Enterprise Limited will hold their meeting on
Oct. 11, 2012, at 10:45 a.m., for the purposes provided for in
Sections 241, 242, 243, 244 and 255A of the Companies Ordinance.
The meeting will be held at Room 704, at 3 Lockhart Road,
Wanchai, in Hong Kong.
GENDA INTERNATIONAL: Creditors' Meeting Set for Oct. 11
-------------------------------------------------------
Creditors of Genda International Limited will hold their meeting
on Oct. 11, 2012, at 12:00 p.m., for the purposes provided for in
Sections 241, 242, 243, 244 and 255A of the Companies Ordinance.
The meeting will be held at Room 704, 3 Lockhart Road, Wanchai,
in Hong Kong.
HK ASSOCIATION: Members' Final Meeting Set for Oct. 12
------------------------------------------------------
Members of Hong Kong Association of Secretaries and
Administrative Professionals Limited will hold their final
meeting on Oct. 12, 2012, at 10:00 a.m., at Suites 1501-2, 15/F,
Chinachem Johnston Plaza, at 178-186 Johnston Road, Wan Chai, in
Hong Kong.
At the meeting, Li Pik Hung, the company's liquidator, will give
a report on the company's wind-up proceedings and property
disposal.
MERRY PEACE: Creditors' Proofs of Debt Due Oct. 29
--------------------------------------------------
Creditors of Merry Peace Enterprises Limited, which is in
members' voluntary liquidation, are required to file their proofs
of debt by Oct. 29, 2012, to be included in the company's
dividend distribution.
The company commenced wind-up proceedings on Sept. 14, 2012.
The company's liquidator is:
Yan Shui Lau Francis
Room 101, 1/F, Tak Fung Building
79-81 Connaught Road
West, Hong Kong
MILLION METRO: Commences Wind-Up Proceedings
--------------------------------------------
Members of Million Metro Investment Limited, on Sept. 21, 2012,
passed a resolution to voluntarily wind up the company's
operations.
The company's liquidator is:
Lee King Yue
72-76/F, Two International Finance Centre
8 Finance Street
Central, Hong Kong
OVAL ENTERPRISES: Members' Final Meeting Set for Oct. 22
--------------------------------------------------------
Members of Oval Enterprises Limited will hold their final meeting
on Oct. 22, 2012, at 10:00 a.m., at 3rd Floor, One Island East,
at 18 Westlands Road, Island East, in Hong Kong.
At the meeting, Chan On Ki and Wong Yuk Ying, the company's
liquidators, will give a report on the company's wind-up
proceedings and property disposal.
REGENT BONUS: Members' Final Meeting Set for Oct. 22
----------------------------------------------------
Members of Regent Bonus International Limited will hold their
final general meeting on Oct. 22, 2012, at 10:00 a.m., at 4/F,
Antonia House, at 12 Broom Road, Happy Valley, in Hong Kong.
At the meeting, Anna Louise Patria, the company's liquidator,
will give a report on the company's wind-up proceedings and
property disposal.
SECURED FINANCIAL: Members' Final Meeting Set for Oct. 22
---------------------------------------------------------
Members of Secured Financial Services Limited will hold their
final general meeting on Oct. 22, 2012, at 11:00 a.m., at 501
Orchard Road, at #17-01 Wheelock Place, in Singapore 238880.
At the meeting, Wang Poey Foon Angela, the company's liquidator,
will give a report on the company's wind-up proceedings and
property disposal.
SHARP UNITED: Creditors' Proofs of Debt Due Oct. 24
---------------------------------------------------
Creditors of Sharp United Limited, which is in members' voluntary
liquidation, are required to file their proofs of debt by
Oct. 24, 2012, to be included in the company's dividend
distribution.
The company's liquidator is:
Lam Tak Keung
Suite 504, South Tower
World Finance Centre
Harbour City, 17-19 Canton Road
Tsimshatsui, Kowloon
Hong Kong
STACA INTERNATIONAL: Members' Final Meeting Set for Oct. 24
-----------------------------------------------------------
Members of Staca International Limited will hold their final
general meeting on Oct. 24, 2012, at 10:00 a.m., at 10/F, Pico
Tower, at 66 Gloucester Road, Wanchai, in Hong Kong.
At the meeting, Eddie Junior Yau, the company's liquidator, will
give a report on the company's wind-up proceedings and property
disposal.
=========
I N D I A
=========
AADHI CARS: ICRA Rates INR7.5cr Loans at '[ICRA]B'
--------------------------------------------------
ICRA has assigned a long-term rating of '[ICRA]B' to the INR 7.50
crore fund based facilities of Aadhi Cars Private Limited.
Amount
Facilities (INR Cr) Ratings
---------- --------- -------
Fund based facilities 7.50 [ICRA]B assigned
The rating considers the Company's nascent stage of operations
with limited track record in its recently opened showroom and the
Company's limited presence restricted largely to Coimbatore which
exposes revenues to geography specific risks. Further, the high
competitive intensity in the industry in general and the presence
of larger Maruti Suzuki India Limited and other Original
Equipment Manufacturers (OEM) dealers in the Coimbatore region in
specific, are likely to impact the Company's pricing flexibility
during early stages of business. The rating also factors in the
susceptibility of domestic passenger vehicle (PV) demand to
cyclical trends and the subdued near term outlook for the
industry owing to high fuel cost and hardening interest rates
among others, which are expected to restrict any sharp
improvement in ACPL's scale during the near term. The thin
margins inherent to the business are also expected to impact the
financial profile of the Company. However, the Company's
association with MSIL (India's largest PV OEM) and the implied
benefits of various channel development programmes by MSIL is
likely to support the overall business prospects of the Company
over a longer term, although near term impact of the recent
labour unrest and consequent stalling of production at Maruti's
Manesar plant is likely to weigh adversely on the Company's
performance.
Aadhi Cars Private Limited, incorporated in 2012, is engaged in
the sale of passenger vehicles of MSIL and has dealership rights
in Coimbatore. The Company is promoted by Mr. S Srinivasan and
his wife Mrs. S Kalaivani. The Company's showroom is a leased
facility with sales, service and spares under one roof. The
Company has also leased a warehouse and is in the process of
setting up service stations located in Nilgiris and Polachi and
operations are expected to commence from December 2012.
BALAJI COTEX: CRISIL Rates INR60MM Cash Credit at 'CRISIL B'
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the cash
credit facility of Balaji Cotex India Private Limited.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 60 CRISIL B/Stable (Assigned)
The rating reflects BCIPL's below average financial risk profile,
marked by small net worth, high gearing, and modest debt
protection metrics, and susceptibility to adverse regulatory
changes. These rating weaknesses are partially offset by the
extensive industry experience of BCIPL's promoters in the cotton
ginning business and the locational advantage of being in the
cotton belt of Andhra Pradesh.
Outlook: Stable
CRISIL believes that BCIPL will continue to benefit from its
promoters industry experience over the medium term. The outlook
may be revised to 'Positive' if BCIPL increases its revenues and
profitability significantly along with improvement in capital
structure. Conversely, the outlook may be revised to 'Negative'
if BCIPL undertakes a larger-than-expected debt-funded capital
expenditure programme or its sales volumes and profitability
decline sharply or if there is a significant stretch in working
capital cycle.
BCIPL incorporated in 2008 is promoted by Mr. Gopal Rao, Mrs
Vimala Rao, Mr. Nand Kishore Lahoti and Mrs. Madhuri Lahoti. The
company is based out of Warangal district of Andhra Pradesh. The
company is engaged in ginning and pressing of raw cotton with a
capacity of 400 bales per day.
BCIPL reported a profit after tax (PAT) of INR0.2 million on net
sales of INR381.6 million for FY12' as against a PAT of INR0.1
million on net sales of INR295.4 million for FY11'.
DICITEX HOME: Delays in Loan Payment Cues Junk Ratings
------------------------------------------------------
ICRA has revised the long-term rating of Dicitex Home Furnishings
Private Limited, formerly Manohar Processors Private Limited to
'[ICRA]D' from '[ICRA]C' for the INR52.8 crore term loan facility
and the INR12.0 crore long term fund-based limits. ICRA has also
revised the short-term rating to [ICRA]D from '[ICRA]A4' earlier
for the INR5.2 crore non fund-based limits of DHFPL.
Amount
Facilities (INR Cr) Ratings
---------- --------- -------
Long-term loans 52.8 [ICRA]D revised from
[ICRA]C
Long-term fund-based 12.0 [ICRA]D revised from
Limits [ICRA]C
Short-term non-fund- 5.2 [ICRA]D revised from
based limits [ICRA]A4
The rating revision reflects recent delays in debt servicing by
the company on account of liquidity constraints. Further the
company's margins remain exposed to increase in raw material
prices, especially in export markets where there is limited
pricing flexibility. The Dicitex group's operating income and
profitability are also vulnerable to the cyclical nature of the
textile industry. ICRA continues to take note of the long
experience of the promoters' in the home furnishings business,
its vertically integrated operations with yarn manufacturing,
fabric processing, yarn dyeing and fabric production and its
focus on value-added products which enables it to garner higher
margins.
The rating revision reflects recent delays in debt servicing by
the company on account of liquidity constraints. Further the
company's margins remain exposed to increase in raw material
prices, especially in export markets where there is limited
pricing flexibility. The Dicitex group's operating income and
profitability are also vulnerable to the cyclical nature of the
textile industry. ICRA continues to take note of the long
experience of the promoters' in the home furnishings business,
its vertically integrated operations with yarn manufacturing,
fabric processing, yarn dyeing and fabric production and its
focus on value-added products which enables it to garner higher
margins.
About Dicitex Home
Dicitex Home Furnishings Private Limited, formerly Manohar
Processors Private Limited and Dicitex Furnishings Limited, part
of the Dicitex group are involved in the designing and
manufacturing of home furnishings and dress materials. While, DFL
was incorporated in May, 1999, DHFPL was formed as a company in
May, 2000. Though DFL and DHFPL exist as separate entities, there
are, however, financial and operationally linkages between the
companies with common set of promoters and inter-company sales.
Additionally, DFL has provided corporate guarantee for the bank
facilities of DHFPL. However, DFL primarily focuses on the export
markets whereas DHFPL's sales are directed towards the domestic
markets. The product portfolio of the group consists of dress
materials such as Salwar Kameez Dupatta and home furnishing
products such as curtains, upholsteries and sheers. Both the
companies have manufacturing units located at Tarapur, with each
company having two units. In the exports market, distribution is
mainly through commission agents who deal with the wholesalers.
In the domestic markets, the distribution network for dress
materials consists mainly of distributors/traders while for home
furnishings is through agents.
Recent results:
As per the audited FY 2010 numbers, Dicitex reported a profit
after tax of INR0.21 crore over an operating income of INR111.9
crore while as per audited FY 2011 numbers it reported a profit
after tax of INR0.81 crore over an operating income of INR141.49
crore.
INDEX SUPPLIERS: CRISIL Cuts Rating on INR85MM Loans to 'D'
-----------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Index
Suppliers Pvt Ltd to 'CRISIL D' from 'CRISIL B-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 59.5 CRISIL D (Downgraded from
'CRISIL B-/Stable')
Term Loan 25.5 CRISIL D (Downgraded from
'CRISIL B-/Stable')
The downgrade reflects instances of delay by ISPL in servicing
its term debt. The delays have been caused by the weakening of
the company's liquidity because of large incremental working
capital requirements. Equity infusion of INR40 million and
incremental short-term borrowings, which ISPL intended to use to
fund the deficit, were not received in time.
The rating also factors in ISPL's weak financial risk profile and
working-capital-intensive operations. These weaknesses are
partially offset by ISPL's promoters' extensive experience in the
steel trading business, and established customer relationships.
ISPL, based in Kolkata and promoted by Mr. Devendra Kumar
Singhania, trades in various steel products. The company procures
as well as sells the products in and around Kolkata. ISPL started
its operations in steel in 1995; it started a coke manufacturing
unit in Dhanbad (Jharkhand) in 2011.
LANCO SOLAR: ICRA Assigns '[ICRA]B+' Rating to INR150cr Loans
-------------------------------------------------------------
ICRA has assigned the long-term rating of '[ICRA]B+' to INR150
Crore of fund based facilities of Lanco Solar Energy Private
Limited. ICRA has also assigned a short term rating of
'[ICRA]A4' to INR425 Crore of non fund based facilities of the
company.
Amount
Facilities (INR Cr) Ratings
---------- --------- -------
Fund Based Limits 150.00 [ICRA]B+
Non Fund Based Limits 425.00 [ICRA]A4
ICRA's ratings have taken into account weak financial performance
of the company as reflected by thin profitability margins, modest
coverage indicators and stretched liquidity on account of high
debtor levels. The fixed price nature of the EPC contracts and
imports (of solar equipments) forming considerable part of EPC
cost, expose the company's profitability to raw material and
forex fluctuations. Furthermore, delayed execution of 7 Rajasthan
based projects in the last fiscal resulted in imposition of
liquidated damages which however were absorbed by the
profitability of the company. The high levels of outside
liabilities comprising interest bearing-customer advances and
buyer's credit coupled with modest profitability resulted in
inadequate coverage indicators. The company's liquidity position
has also been significantly impacted on account non-payment of
dues (-INR345 Core) by 6 Rajasthan projects because of issues in
loan availability in these projects. However concerns on the
debtor recovery have been mitigated to a large extent as 5 of
these projects have achieved the financial closure and financial
closure for the sixth project is underway. ICRA also factors in
the high execution risks faced by the company on the solar
thermal plants being set up (contributing 200 MW to the total
order book of -295 MW); solar thermal power technology is
technologically more complex though tying up with the renowned
technology service provider mitigates execution risks to some
extent, however changes in project design have already resulted
in these projects running behind schedule and non placement of
orders for key components such as heat transfer fluid increase
the execution risks. The cost overruns on account of increase in
prices of some of the components and rupee depreciation is
expected to impact the profitability of these projects as major
portion of the EPC cost is denominated in USD and EPC contracts
do not include price variation clause. Moreover, time overruns
(if any) would invite LD charges which would further impact the
profit margins. The ratings also note the funding risks the
company is exposed to for the execution of the current order
book. The non fund based limits of the company are not adequate
to meet the procurement of imported components, essentially for
the solar thermal projects; hence the company would be utilizing
solar thermal projects' sanctioned limits for the same. The
financial flexibility of LSEPL would be considerably dependent on
recovery of debtors against Rajasthan based projects and transfer
of mobilization advances (INR440 Crore) received by LITL from
solar thermal power projects to LSEPL. Furthermore, weak
financial health and significant funding commitments of the
promoter company, Lanco Infratech Limited has weakened the
funding support to LSEPL in case of any funding gaps.
Going forward, the recovery of outstanding debtors from the
Rajasthan based projects, transfer of mobilization advances of
solar thermal projects from LITL to LSEPL, and LSEPL's ability to
execute the current order book without incurring time & cost
overruns and ensuring timely payment collection from the clients
would key sensitivities.
LEATHER TECH: CRISIL Cuts Rating on INR1MM Loan to 'CRISIL B-'
--------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Leather Tech to 'CRISIL B-/Stable' from 'CRISIL B/Stable',
while reaffirming the rating on the firm's short-term bank
facilities at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bill Discounting 16.5 CRISIL A4 (Reaffirmed)
Cash Credit 1.0 CRISIL B-/Stable (Downgraded
from 'CRISIL B/Stable')
Letter of Credit 30.0 CRISIL A4 (Reaffirmed)
Packing Credit 62.5 CRISIL A4 (Reaffirmed)
The downgrade reflects CRISIL's belief that LT's financial risk
profile, particularly its liquidity, will remain constrained by
declining profitability. LT's profitability will remain under
pressure because of the high cost raw material inventory procured
by the firm. In 2011-12 (refers to financial year, April 1 to
March 31), LT's operating margin declined drastically, because of
the sharp increase in raw material prices and demand slowdown in
Europe. Over the past four years, LT's revenues and profitability
have been declining, primarily because of volatility in raw
material prices, high customer concentration, and intense
industry competition. In 2011-12, the operating margin of around
4.7 per cent and revenues of around INR150 million registered by
the firm were significantly lower than CRISIL's expectation.
Given the current global economic scenarios and bleak leather
industry outlook, CRISIL believes that LT will not be able to
report any significant improvement in its scale of operations,
and that the pressure on its profitability will continue over the
near term.
The ratings continue to reflect LT's weak financial risk profile,
marked by a high gearing and weak debt protection metrics,
because of the highly working-capital-intensive nature of the
leather industry, and the firm's geographical and customer
concentration. The ratings also reflect LT's small scale of
operations in the intensely competitive leather industry, and
vulnerability to volatility in raw material prices and in foreign
exchange rates. These ratings weaknesses are partially offset by
the extensive experience of LT's partners in the leather
business.
Outlook: Stable
CRISIL believes that LT will continue to benefit over the medium
term from its partners' extensive experience in the leather
business. CRISIL, however, also believes that LT's financial risk
profile, particularly its liquidity, will remain weak over the
medium term, until the firm offloads the large raw material
inventory it procured in 2011-12.The outlook may be revised to
'Positive' in case LT significantly improves its scale of
operations and profitability, and achieves reduction in its
inventory levels, leading to more-than-expected cash accruals, or
by way of capital infusion by its promoters-partners. Conversely,
the outlook may be revised to 'Negative' if the firm's financial
risk profile, particularly its liquidity, deteriorates, most
likely because of inventory loss suffered or decline in its sales
and operating margin, leading to less-than-expected cash
accruals.
About Leather Tech
Incorporated in 1991, Leather Tech is a partnership firm between
three brothers, Mr. Jasbir Singh Kapoor, Mr. Surbir Singh Kapoor
and Mr. Amarjeet Singh Kapoor. Leather Tech is engaged in the
manufacturing of leather garments like leather jackets, coats and
shirts. It mainly exports to European countries to various
importers who in turn sell to large retail and fashion houses in
Europe. The firm has its unit at Okhla Industrial Area, New Delhi
and has a capacity to manufacture about 7000-8000 garments per
month.
In 2011-12, LT's profit after tax (PAT) is estimated at around
INR5.3 million on net sales estimated of around INR150 million,
against a PAT of INR9 million reported on net sales of INR199
million in 2010-11.
LML LIMITED: ICRA Reaffirms Junk Ratings on INR125cr Loan
---------------------------------------------------------
ICRA has reaffirmed the '[ICRA]D' rating for INR125 Crore
Preference Share Capital Programme of LML Limited.
The rating reaffirmation takes into account LML's continued
default on both its principal as well as interest obligations
related to its debt. The company had become a sick industrial
unit due to erosion of its net worth and its current liabilities
exceeded its current assets by INR 450.7 Crore as on March 31,
2012, as compared to INR 246.8 Crore as on March 31, 2011. LML
was referred to the Board for Industrial and Financial
Reconstruction (BIFR) in September 2006 and continues to remain
under the latter's purview as on date.
Recent Results
For the financial year 2011-12, LML reported Operating Income of
INR310.4 Crore, Operating Profit before Depreciation, Interest
and Tax (OPBDIT) of INR3.0 Crore and Net Loss of INR45.2 Crore.
LML Limited was promoted in 1972 as Lohia Machines Limited by the
Singhania family to manufacture machinery for the synthetic
fibres industry. Later, it diversified into production of 100 cc
scooters, in technical collaboration with Piaggio Vespa, of Italy
in 1984. Piaggio later took up 23.5% equity stake, which it later
divested in favour of the Indian promoters pursuant to the
settlement reached following certain legal disputes, which were
settled out-of court. Subsequently, the company entered into
technical collaboration with Daelim Motor Company, South Korea
(DMC) to set up a small capacity for manufacturing of four-stroke
motorcycles. Following a strike by the workers, LML had declared
a lock-out at its factory in Kanpur with effect from March 7,
2006. The lock-out remained in place for over a year and the same
was lifted only in April 2007 pursuant to a tripartite agreement
reached between the company, the Trade Union and the Labour
Department of Government of Uttar Pradesh. Since then, although
production has been regular, it is currently at much lower levels
of around 6,400 units per month.
MINDA CORP: Delays in Loan Payment Cue ICRA Junk Ratings
--------------------------------------------------------
ICRA has downgraded the long term rating for the INR 54.80 Crore
bank facilities of Minda Corporation Limited to '[ICRA]D' from
'[ICRA]BBB'. ICRA has also downgraded the short-term rating for
the INR 14.80 Crore bank facilities of MCL to '[ICRA]D' from
'[ICRA]A2'. The total rated bank facilities by ICRA are for an
amount of INR 69.60 Crore.
Amount
Facilities (INR Cr) Ratings
---------- --------- -------
Term Loan 36.32 Downgraded to [ICRA]D
from [ICRA]BBB
Cash Credit 17.60 Downgraded to [ICRA]D
from [ICRA]BBB
Fund-based limits 9.30 Downgraded to [ICRA]D
from [ICRA]A2
Non Fund Based Limits 5.50 Downgraded to [ICRA]D
from [ICRA]A2
Unallocated 0.88 Downgraded to [ICRA]D
from [ICRA]BBB
The revised rating reflects delays in timely debt servicing by
MCL in respect of principal repayments to banks during 2011-12.
The auditor's report for 2011-12 mentions about delays by MCL of
1 day to 17 days in respect of repayment of 11 tranches of bank
loans ranging from INR 25 lakhs to INR 83 lakhs. As per the
management, these delays were due to management oversight of
timely payment and not due to unavailability of funds. ICRA would
hold further discussion with the management to understand steps
implemented to prevent future recurrence of such delays and
review the rating accordingly.
Minda Corporation Limited or MCL (formerly Minda Huf Ltd or MHL)
is the flagship company of the Ashok Minda Group, currently
having manufacturing facilities located at Noida (Uttar Pradesh),
Greater Noida (Uttar Pradesh), Pune (Maharashtra), Aurangabad
(Maharashtra) and Pantnagar (Uttaranchal). The Company was
incorporated in 1985 as Minda Switch Auto Limited to manufacture
switches and security systems for automobiles. Currently, MCL is
engaged in the manufacture of Mechanical & Electronic Security
Systems (for two-wheelers, three-wheelers and off -road
vehicles), Manual & Power Window Regulators (for four-wheelers),
Wiring Harnesses (for two-wheelers) and Interior Plastics for
four-wheelers. It has also diversified into aluminium die-casting
and surface finishing businesses. MCL has technical
collaborations with M/s Castellon (Spain) for Window Regulators
and with NEC Corporation (Singapore) and ISK (China) for Security
Systems of E-bikes. In Apr 2007, MCL had acquired KTSN, Germany,
a company engaged in the business of making interior plastics
components for various European OEMs. MCL is listed on the Delhi
Stock Exchange and the Madras Stock Exchange.
On a standalone basis, in 2011-12, MCL reported Net Sales of
INR539.5 Crore, Profit Before Depreciation, Interest & Tax
(PBDIT) of INR 61.2 Crore and Profit after Tax (PAT) of INR40.2
Crore.
On a consolidated basis, in 2011-12, MCL reported Net Sales of
INR 1345.2 Crore, Profit Before Depreciation, Interest & Tax
(PBDIT) of INR 140.5 Crore and Profit after Tax (PAT) of INR 51.5
Crore.
Recent Results
On a standalone basis, in Q1 2012-13, MCL reported Net Sales of
INR 149.7 Crore Profit Before Depreciation, Interest & Tax
(PBDIT) of INR 12.6 Crore and Profit after Tax (PAT) of INR 6.0
Crore, as per the unaudited quarterly results.
On a consolidated basis, in Q1 2012-13, MCL reported Net Sales
of INR 507.4 Crore, Profit Before Depreciation, Interest & Tax
(PBDIT) of INR 27.9 Crore and Profit after Tax (PAT) of INR5.0
Crore, as per the unaudited quarterly results.
OCEANIC EDIBLES: Delays in Loan Payment Cue CRISIL Junk Ratings
---------------------------------------------------------------
CRISIL has downgraded its rating on the bank facilities of
Oceanic Edibles International Ltd (part of the Oceanic Edibles
group) to 'CRISIL D/CRISIL D' from 'CRISIL B-/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long-Term Loan 465.30 CRISIL D (Downgraded from
'CRISIL B-/Stable')
Cash Credit 1218.00 CRISIL D (Downgraded from
'CRISIL B-/Stable')
Letter of Credit 130.00 CRISIL D (Downgraded from
'CRISIL A4')
Export Packing Credit 285.00 CRISIL D (Downgraded from
'CRISIL A4')
Bank Guarantee 4.70 CRISIL D (Downgraded from
'CRISIL A4')
Proposed Cash Credit 247.00 CRISIL D (Downgraded from
'CRISIL B-/Stable')
The rating downgrade reflects instances of delays by OEIL in
servicing its term debt; the delays have been caused by the
Oceanic Edibles group's weak liquidity arising on account of
group's large working capital requirements.
The group has a below-average financial risk profile, marked by
high gearing and weak debt protection metrics and large working
capital requirements. The group is exposed to risks related to
geographical concentration in its revenue profile, and
susceptibility to volatility in its foreign exchange rates. The
group, however, benefits from its fully integrated operations and
strong sourcing network.
For arriving at its ratings, CRISIL has consolidated the business
and financial risk profiles of OEIL and Oceanic Bio Harvests Ltd,
together referred to as the Oceanic Edibles group, because both
companies are in similar lines of business, share significant
business synergies, and are operated by the same management.
About Oceanic Edibles
Incorporated in 1994 as Oceanic Shrimping Ltd, OEIL is engaged in
the processing and retailing of food items such as fruits,
vegetables, and marine products, including shrimp and fish.
Incorporated in 2007, OBHL is engaged in the businesses of
aquaculture and hatcheries. OEIL and OBHL are part of the Oceanaa
group of companies, which operates mainly in two businesses: food
processing and software development.
SABER PAPER: Delay in Loan Payment Cues CRISIL Junk Ratings
-----------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Saber
Paper Boards Pvt Ltd to 'CRISIL D/CRISIL D' from 'CRISIL
BB/Stable/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2.6 CRISIL D (Downgraded from
'CRISIL BB/Stable')
Cash Credit 250.0 CRISIL D (Downgraded from
'CRISIL BB/Stable')
Letter of Credit 252.4 CRISIL D (Downgraded from
'CRISIL BB/Stable')
Term Loan 638.1 CRISIL D (Downgraded from
'CRISIL BB/Stable')
The downgrade reflects instances of delay by SPBPL in servicing
its debt; the delays have been caused by the company's weak
liquidity, which is mainly on account of large debt-funded
capital expenditure and working capital requirements.
SPBPL has a weak financial risk profile, marked by high gearing,
modest net worth, and weak debt protection metrics, and large
working capital requirements. These rating weaknesses are
partially offset by SPBPL's moderate operating efficiencies
because of its semi-integrated plant, the benefits that the
company derives from its promoters' experience in the paper
industry, and its established distribution network.
About Saber Paper
SPBPL (formerly, Jai Durga Paper Mills Pvt Ltd), incorporated in
1996 by Satendra Gupta, was acquired by Mr. Dinesh Soin and his
family members in 2004. The company manufactures packaging paper
(kraft paper), corrugated boxes, and has captive power generation
capacity of 2 megawatt. The company has installed capacity of 125
tonnes per day for Kraft paper and 110 tpd of capacity for
Corrugated boxes. The unit is located in Ludhiana (Punjab).
SPBPL's profit after tax (PAT) and operating income are estimated
at INR24 million and INR805.3 million, respectively, for 2011-12
(refers to financial year, April 1 to March 31); the company
reported a PAT of INR12 million on an operating income of
INR657.5 million for 2010-11.
S. R. COTTON: ICRA Upgrades Rating on INR60MM Loan to 'B+'
----------------------------------------------------------
CRISIL has upgraded its rating on the bank facilities of
S. R. Cotton to 'CRISIL B+/Stable' from 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 60 CRISIL B+/Stable (Upgraded from
'CRISIL B/Stable')
The rating upgrade reflects SRC's improved business risk profile,
driven by high year-on-year revenue growth of 22 per cent in
2011-12 (refers to financial year, April 1 to March 31). The firm
also achieved better working capital management, as indicated by
the decline in its gross current asset days to 94 as on March 31,
2012, from 141 as on March 31, 2011. The upgrade also reflects
the improvement in SRC's financial risk profile, with a decline
in gearing to 8.59 times as on March 31, 2012, from 11.03 times
as on March 31, 2011, and continued financial support from its
proprietor. The proprietor and his associates have extended
interest-bearing unsecured loans to the firm, the balance of
which stood at INR98.3 million as on March 31, 2012.
Despite the above, SRC's financial risk profile remains weak,
with a small net worth, high gearing, and weak debt protection
metrics. The rating also reflects the firm's exposure to
regulatory risks, and to volatility in cotton input prices. These
rating weaknesses are partially offset by the extensive industry
experience of SRC's proprietor, and financial support provided by
him and his associates in the form of interest-bearing unsecured
loans.
Outlook: Stable
CRISIL believes that SRC will continue to benefit over the medium
term from its proprietor's extensive experience in the cotton
ginning industry. The outlook may be revised to 'Positive' in
case SRC's financial risk profile improves, most likely driven by
improved working capital management, better-than-expected
profitability, or capital infusion. Conversely, the outlook may
be revised to 'Negative' in case of deterioration of the firm's
liquidity, resulting from larger-than-expected working capital
requirements or withdrawal of unsecured loans by the proprietor
and his associates.
SRC was set up in 2006 as a proprietorship firm by Mr Vinit
Tayal. The firm is engaged in cotton ginning and pressing at its
two units in Beed (Maharashtra) and Sendhwa (Madhya Pradesh).
SRC's profit after tax (PAT) is estimated at INR1.4 million on
net sales of INR606.1 million, for 2011-12; the firm had reported
a PAT of INR4.2 million on net sales of INR496.0 million for
2010-11.
=================
I N D O N E S I A
=================
ANTAM (PERSERO): S&P Affirms 'B+' Corporate Credit Rating
---------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Indonesia-based mining company PT Antam (Persero) Tbk. to
negative from stable. "At the same time, we affirmed the 'B+'
long-term corporate credit rating on the company," S&P said.
"We revised the outlook because we expect Antam's financial risk
profile to weaken due to a higher-than-expected increase in the
company's capital spending over the next 24 months," said
Standard & Poor's credit analyst Xavier Jean. "We now estimate
that the company's capital expenditure could reach Indonesian
rupiah (IDR) 14 trillion in 2012-2013, compared with our earlier
forecast of IDR7.8 trillion. We expect most of the capital
expenditure to be debt-funded."
"Antam is increasingly committed to its stated capital spending
plan over the next two years, in our view. This is largely to
mitigate a possible drop in profitability if the Indonesian
government bans unprocessed nickel ore exports in 2014. Higher
capital spending could strain the company's cash flows more
than we had expected. Currently subdued nickel prices compound
this risk. We forecast Antam's debt-to-EBITDA ratio at more than
4.5x in 2013, from about 1.2x in 2011, and its ratio of funds
from operations (FFO) to debt at below 15%, from about 68% in
2011. This could lead to a weakening of the company's financial
risk profile to 'highly leveraged' from 'aggressive,' as our
criteria define these terms," S&P said.
"A potential disposal of Antam shares owned by the Government of
Indonesia (BB+/Positive/B; axBBB+/axA-2) will not affect our
rating or outlook on the company. We consider Antam to be a
government-related entity according to our criteria. However, we
assess Antam as having 'limited importance' and 'limited link' to
the government. This means that we do not factor in any
exceptional government support in our 'b+' stand-alone credit
profile on the company," S&P said.
The rating on Antam reflects the company's high capital spending
plans, its exposure to volatile nickel prices, the weak cost
competitiveness of its ferronickel operations, and regulatory
uncertainty. Antam's good quality mining assets, second quartile
cost position among nickel ore producers, and adequate liquidity
temper these weaknesses.
"The negative outlook reflects our expectation that the
substantial debt-funded capital spending plan could weaken
Antam's cash flows and increase its leverage over the next 12
months," said Mr. Jean.
"We could lower the rating if Antam's financial risk profile
weakens materially, such that its debt-to-EBITDA ratio is above
5x and FFO-to-total-debt ratio is below 15%. This could happen if
the company's capital expenditure exceeds IDR5 billion in 2012
and in 2013 and average nickel prices are lower than $7.75 per
pound," S&P said.
"We could revise the outlook to stable if Antam's capital
spending is more gradual than we expect, such that its debt-to-
EBITDA ratio stabilizes below 4.5x and its FFO-to-total-debt
ratio is greater than 20%," S&P said.
BERAU COAL: S&P Affirms 'BB-' Corp. Credit Rating; Outlook Neg.
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook on
Indonesia-based coal mining company PT Berau Coal Energy Tbk. to
negative from positive. "At the same time, we affirmed our 'BB-'
long-term corporate credit rating on the
company and our 'BB-' issue ratings on all the company's
outstanding senior notes," S&P said.
"We revised the outlook to negative as we believe Berau Energy's
financial performance will be weaker over the next 12 months than
we previously anticipated. We believe the company's significant
financial risk profile could weaken to aggressive, reversing a
recent improvement," said Standard & Poor's credit analyst Xavier
Jean.
S&P expects Berau Energy's gross profit per ton and sales volume
growth to be weaker than we earlier expected for 2013. These
factors will likely weaken the company's debt-to-EBITDA ratio to
about 4x in 2013, compared with S&P's expectation of less than 2x
when S&P revised the rating outlook on the company to positive in
February 2012. S&P based its financial forecasts on these
assumptions:
-- A gross profit per ton of coal sold, before depreciation and
amortization, of about US$15 in 2013. This is weaker than the
US$22-US$25 S&P had previously anticipated. Sales contracts
for the majority of 2013 coal production will likely be based
on the current subdued prices, while production costs should
remain elevated over the period.
-- Sales volumes of about 23 million tons in 2013. These are
lower than S&P's original expectation of about 27 million
tons because it expects subdued market demand for coal to
persist in 2013.
"We believe incremental supply from the seaborne thermal coal
market in Asia at a time of softer demand growth will likely
limit a rapid, substantial, and sustainable price recovery over
the next six months at least. Yet, the currently lower price
environment--with Newcastle benchmark prices hovering around
US$90 per ton--is starting to test the higher-cost producers in
Australia and marginal producers in Indonesia. This could provide
some support from further material price falls," S&P said.
"Berau Energy's limited short-term refinancing needs mitigate, in
our view, the potentially negative effect of an investigation by
Berau Energy's majority owner, Bumi PLC (not rated), into
unconfirmed, alleged financial irregularities at Berau Energy.
The company has about US$37.8 million in accrued interest and
about US$1.8 million in short-term debt due as of June 30, 2012,"
S&P said.
"The affirmed rating on Berau Energy is a combination of the
company's current 'weak' business risk profile and 'significant'
financial risk profile. The rating reflects the Indonesian coal
producer's mineral, customer and single-mine concentration risks,
regulatory uncertainty, and its aggressive capital structure.
Berau Energy's good record of production growth and low, albeit
increasing, production costs partially offset these weaknesses,"
S&P said.
"The negative outlook reflects our expectation that sluggish coal
prices and lower sales volumes will likely weaken the company's
cash flows over the next 12 months, interrupting the recent trend
of improvement in the financial risk profile," said Mr. Jean.
S&P says it could lower the rating if one of these occurs:
-- Berau Energy's cash flows weaken such that its debt-to-EBITDA
ratio increases above 4x for more than 12 months. This could
materialize if: (1) production and sales volumes fall below
22 million tons in 2013, while its gross profit per ton of
coal sold declines below US$15 over the period; or (2) the
company engages in further debt-funding capital spending in
excess of S&P's expectations.
-- Credit-negative operational or financial policy changes from
Bumi PLC, including a more aggressive dividend distribution
or related-party transactions weaken Berau Energy's financial
risk profile or disrupt its operations.
-- Indonesia's mining regulations or accounting changes such
that Berau Energy's sales, profitability, or cash position is
materially affected.
"We could revise the outlook to stable if Berau's debt-to-EBITDA
ratio stabilizes between 2.5x and 3.5x. We believe this could
materialize if the company's gross profit per ton exceeds US$20
with sales volumes exceeding 25 million tons for more than 12
months," S&P said.
BUMI RESOURCES: Moody's Revises Outlook on 'B1' CFR to Negative
---------------------------------------------------------------
Moody's Investors Service has revised the outlook on PT Bumi
Resources Tbk's B1 corporate family and senior secured bond
ratings to negative from stable.
Ratings Rationale
"The negative outlook reflects Moody's concern that the lingering
corporate governance issues at Bumi Resources will impact its
ability to refinance its scheduled loan maturities of over USD300
million in 2013," says Simon Wong, a Moody's Vice President and
Senior Analyst.
On 24 September, Bumi Plc, which has a 29.2% stake in Bumi
Resources, commissioned an independent investigation into
allegations concerning, among other matters, potential financial
and other irregularities in its Indonesian operations, especially
in relation to Bumi Resources.
Recent corporate governance issues also include an enquiry from a
board member of Bumi Plc in November 2011 that led to Bumi
Resources speeding up the recovery of US$231 million in funds
under management from PT Recapital Asset Management and the
collection of its unsecured long-term receivables worth USD251
million due from Bukit Mutiara.
The repayment from Recapital, which was first due in H1 2012 and
subsequently on August 27, did not materialize. Half of the
amount from Bukit Mutiara is due in H2 2012 and the remainder in
2013.
"Moody's remains concerned about the substantial interest burden
of Bumi Resources, its lower operational cash flow resulting from
strained margins, as well as the likely weak demand for thermal
coal in the near to medium term," adds Mr. Wong, who is also the
Lead Analyst for Bumi Resources.
The high debt levels of Bumi Resources and the liquidity risk at
the holding company level are also a concern, given the
structural separation from the underlying coal assets, which
drive the group's cash flow. At the holdco level, Bumi Resources
currently has debt of US$3,950 million, of which US$300 million
falls due over the next 12 months and will need to be refinanced.
Downward pressure could emerge if Bumi Resources continues with
its capacity expansion plans while industry fundamentals remain
weak, or if it is unable to reduce leverage at the holding
company level. Downward pressure could also emerge if Bumi
Resources does not develop timely and concrete plans to refinance
the scheduled maturities due in Q3 2013.
Indicators that Moody's would consider for a downgrade include
adjusted consolidated debt/EBITDA exceeding 4.5x or adjusted
consolidated EBIT/interest expense staying below 1.5x-2x.
Other negative rating triggers include: (1) a material change in
Bumi Plc's financial policy that causes Bumi Resources' capital
structure to deteriorate; (2) any adverse decision regarding the
off-setting of value-added tax payments; or (3) any change in
laws and regulations, particularly with regard to mining
concessions, that adversely affect the business.
The principal methodology used in rating Bumi Resources was the
Global Mining Industry Methodology published in May 2009.
Bumi Resources is Indonesia's largest thermal coal producer and
one of the three largest thermal coal exporters globally. Through
its principal assets (a 65% stake in PT Kaltim Prima Coal and a
70% stake in PT Arutmin), Bumi produced 66 million tons of coal
in 2011 and which accounted for approximately 19% of Indonesia's
total coal production.
Its non-coal resource holding company, Bumi Resource Mineral, was
listed on the Indonesian Stock Exchange on 9 December 2010. Bumi
Resources currently owns 87.09% of Bumi Resource Mineral.
Bumi Plc, previously known as Vallar Plc, completed the
acquisition of a 25% stake in Bumi Resources in March 2011,
through a share swap with the Bakrie Group. In early 2012, Bakrie
& Brothers sold half of its 54.6% stake in Bumi PLC to Borneo
Lumbung Energi & Metal, a major coking coal producer in
Indonesia, because of debt problems.
BUMI RESOURCES: S&P Cuts Corporate Credit Rating to 'B+'
--------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term
corporate credit rating on Indonesia-based coal mining company PT
Bumi Resources Tbk. to 'B+' from 'BB-'. "At the same time, we
lowered the issue rating on the company's guaranteed senior
unsecured notes to 'B+' from 'BB-'. We also lowered our long-term
ASEAN regional scale rating on Bumi Resources to 'axBB-' from
'axBB'. We then placed all of the ratings on CreditWatch with
negative implications," S&P said.
Standard & Poor's downgraded Bumi Resources following an
announcement that a 29% shareholder in the company, Bumi PLC (not
rated), is investigating potential financial and other
irregularities at its Indonesian operations, especially in
relation to Bumi Resources.
"In our view, the investigation could weaken Bumi Resources'
position in the capital markets, test its ability to refinance
its debt maturities, and increase funding costs over next 12
months," said Standard & Poor's credit analyst Xavier Jean.
"The investigation comes at a time of slower production growth
over the next 12 months than we earlier expected and continued
subdued coal prices that further constrain the company's cash
flows and weaken its debt-servicing ability and credit ratios.
Bumi Resources will need to refinance more than US$400 million
of debt maturities in 2013," S&P said.
"We placed the ratings on CreditWatch because of the lack of
clarity regarding the scope and possible outcome of the
investigation. Further rating downside is possible if the
investigation were to divulge any financial irregularities
that will: result in cash flow stress; cause regulatory or legal
issues; affect the company's 'fair' business risk profile, as
defined in our criteria; or weaken its liquidity position," S&P
said.
"Resolution of the CreditWatch and the extent of any future
rating action will depend on the timing, progress, and outcome of
the investigation. In resolving the CreditWatch, we will also
consider whether this event has a prolonged negative impact on
the company's future access to the capital markets for
refinancing," said Mr. Jean.
=========
J A P A N
=========
ELPIDA MEMORY: Bondholders Fight for Court Liaison Appointment
--------------------------------------------------------------
Jamie Santo at Bankruptcy Law360 reports that Elpida Memory Inc.
bondholders fired back Tuesday after the Japanese chipmaker
objected to their request for the expedited appointment of a
liaison between the U.S. and Japanese courts handling the
company's bankruptcy, claiming immediate action is necessary
given the rapid progress of the foreign proceedings.
Decrying a lack of timely information, bondholders on Friday
asked U.S. Bankruptcy Judge Christopher S. Sontchi, who is
overseeing Elpida's Chapter 15 case in Delaware, to hear their
motion to appoint an intermediary on a shortened basis,
Bankruptcy Law360 relates.
About Elpida Memory
Elpida Memory Inc. (TYO:6665) -- http://www.elpida.com/ja/-- is
a Japan-based company principally engaged in the development,
design, manufacture and sale of semiconductor products, with a
focus on dynamic random access memory (DRAM) silicon chips. The
main products are DDR3 SDRAM, DDR2 SDRAM, DDR SDRAM, SDRAM,
Mobile RAM and XDR DRAM, among others. The Company distributes
its products to both domestic and overseas markets, including the
United States, Europe, Singapore, Taiwan, Hong Kong and others.
The company has eight subsidiaries and two associated companies.
After semiconductor prices plunged, Japan's largest maker of DRAM
chips filed for bankruptcy in February with liabilities of 448
billion yen ($5.6 billion) after losing money for five quarters.
Elpida Memory and its subsidiary, Akita Elpida Memory, Inc.,
filed for corporate reorganization proceedings in Tokyo District
Court on Feb. 27, 2012. The Tokyo District Court immediately
rendered a temporary restraining order to restrain creditors from
demanding repayment of debt or exercising their rights with
respect to the company's assets absent prior court order.
Atsushi Toki, Attorney-at-Law, has been appointed by the Tokyo
Court as Supervisor and Examiner in the case.
Elpida Memory Inc. sought the U.S. bankruptcy court's recognition
of its reorganization proceedings currently pending in Tokyo
District Court, Eight Civil Division. Yuko Sakamoto, as foreign
representative, filed a Chapter 15 petition (Bankr. D. Del. Case
No. 12-10947) for Elpida on March 19, 2012.
OLYMPUS CORP: Sony to Buy 11.46% Stake in Olympus
--------------------------------------------------
Takashi Amano and Mariko Yasu at Bloomberg New report that Sony
Corp. will invest JPY50 billion (US$645 million) in Olympus Corp.
as part of its strategy to move into the medical-equipment
business.
The two companies will form a joint venture to make endoscopes
and other medical devices, according to finance ministry filings
obtained by Bloomberg.
Bloomberg says Sony President Kazuo Hirai set a goal of entering
into new businesses when he took over in April with the company
reeling from four years of losses. The investment will help
Olympus, which admitted to a 13-year accounting fraud last year,
shore up its capital ratio as it recovers from the scandal that
led the company to restate earnings and replace its entire board,
according to Bloomberg.
Bloomberg discloses that Sony will buy an 11.46% stake in Olympus
and become its largest shareholder in two tranches. In the
first, to be done by Oct. 23, Japan's biggest consumer-
electronics exporter will purchase 13.1 million shares at
JPY1,454 apiece, costing JPY19 billion. In the second tranche,
Sony will buy 21.3 million shares at the same price, costing
JPY31 billion. This will be completed by Feb. 28.
According to the report, the two companies will set up a joint
venture by the end of this year to develop, make and sell new
endoscopes and other medical devices. Sony will hold 51% of the
venture and Olympus 49%, the report notes.
Sony and Olympus also agreed to make efforts to elect one
director, selected by Sony, into Olympus's board, according to a
joint statement cited by Bloomberg.
About Olympus Corp.
Based in Japan, Olympus Corporation (TYO:7733) --
http://www.olympus-global.com/-- manufactures and sells medical
products, life and industrial products, imaging products,
information communication products and other products. As of
March 31, 2011, the Company has 188 subsidiaries and 11
associated companies.
As reported in the Troubled Company Reporter-Asia Pacific on
May 14, 2012, Japan Today said Olympus Corp. posted a
JPY48.99 billion loss in the year to March, a shortfall largely
tied to a loss cover-up at the camera and medical equipment maker
that hammered Japan's corporate-governance image. Japan Today
said the firm attributed the loss to a scandal that sparked
lawsuits and the arrest of former executives accused of
hiding about US$1.7 billion in investment losses. According to
the report, Olympus said the result, which reversed a small
profit of JPY3.87 billion a year earlier and was bigger than
forecast, was largely attributed to costs related to the cover-
up.
SHARP CORP: Lenders to Provide JPY360 Billion in New Loans
----------------------------------------------------------
Jiji Press reports that Sharp Corp.'s main creditors are set to
extend another JPY360 billion in loans to the struggling
electronics maker after giving high marks to its restructuring
plan, informed sources said.
The company will thus be able to secure funds to redeem
commercial paper falling due this business year, which will end
in March, Jiji Press says.
According to the report, informed sources said a total of
JPY180 billion, including JPY150 billion in refinancing loans,
will be extended by Mizuho Corporate Bank and Bank of Tokyo-
Mitsubishi UFJ.
Other creditor financial institutions, including Resona Bank,
Mizuho Trust & Banking Co. and Mitsubishi UFJ Trust and Banking
Corp., will provide the rest next month or later, Jiji's sources
said.
Jiji Press relates that sources said Mizuho Corporate Bank
decided on Sept. 27, 2012, to provide fresh loans to Sharp, and
Bank of Tokyo-Mitsubishi UFJ is expected to follow with a similar
decision by the end of last week.
About Sharp Corporation
Based in Osaka, Japan, Sharp Corporation (TYO:6753) --
http://sharp-world.com/-- manufactures and sells
electronic telecommunication devices, electronic machines and
components.
As reported in the Troubled Company Reporter-Asia Pacific on
Sept. 4, 2012, Standard & Poor's Ratings Services lowered to
'BB+' its long-term corporate credit and senior unsecured debt
ratings on Sharp Corp. and its overseas subsidiaries, Sharp
Electronics Corp. and Sharp International Finance (U.K.) PLC. "At
the same time, we lowered our short-term ratings on the companies
to 'B' from 'A-2'. We kept Sharp's long- and short-term ratings
on CreditWatch with negative implications," S&P said.
"Sharp's liquidity position is weakening, in Standard & Poor's
view. Internal cash flow remains weak, and financial market
conditions for the company have deteriorated. The company has
forecast an expected JPY250 billion net loss for fiscal 2012
(ending March 31, 2013), exceeding its budgeted depreciation
expense of JPY200 billion. As of June 30, 2012, Sharp had a high
dependence on short-term borrowings. It had JPY336 billion in
short-term debt and JPY362 billion in commercial paper. In recent
weeks, the company has faced unfavorable financial market
conditions, as evidenced by a recent rise in spreads on credit
default swaps, which has added to its difficulty in issuing new
commercial paper. Weak internal cash flow has forced the company
to repay its commercial paper primarily with bank borrowings.
Because its current liquidity needs exceed sources, we view
Sharp's liquidity position as 'less than adequate.' Under our
ratings criteria, we assign an issuer credit rating no higher
than 'BB+' to a company with 'less than adequate' liquidity," S&P
said.
The TCR-AP reported on Aug. 7, 2012, that Moody's Investors
Service downgraded its short-term ratings on Sharp Corporation
and its supported subsidiaries, Sharp International Finance (UK)
plc and Sharp Electronics Corporation, to Prime-3 from Prime-2.
The ratings remain under review for further downgrade. The rating
action reflects Moody's increasing concern that the company's
weak operating performance and additional restructuring costs
will continue to pressure its cash flow downwards, thereby
increasing its dependence on external sources for liquidity.
About Sharp Corporation
Based in Osaka, Japan, Sharp Corporation (TYO:6753) --
http://sharp-world.com/-- manufactures and sells
electronic telecommunication devices, electronic machines and
components.
As reported in the Troubled Company Reporter-Asia Pacific on
Sept. 4, 2012, Standard & Poor's Ratings Services lowered to
'BB+' its long-term corporate credit and senior unsecured debt
ratings on Sharp Corp. and its overseas subsidiaries, Sharp
Electronics Corp. and Sharp International Finance (U.K.) PLC. "At
the same time, we lowered our short-term ratings on the companies
to 'B' from 'A-2'. We kept Sharp's long- and short-term ratings
on CreditWatch with negative implications," S&P said.
"Sharp's liquidity position is weakening, in Standard & Poor's
view. Internal cash flow remains weak, and financial market
conditions for the company have deteriorated. The company has
forecast an expected JPY250 billion net loss for fiscal 2012
(ending March 31, 2013), exceeding its budgeted depreciation
expense of JPY200 billion. As of June 30, 2012, Sharp had a high
dependence on short-term borrowings. It had JPY336 billion in
short-term debt and JPY362 billion in commercial paper. In recent
weeks, the company has faced unfavorable financial market
conditions, as evidenced by a recent rise in spreads on credit
default swaps, which has added to its difficulty in issuing new
commercial paper. Weak internal cash flow has forced the company
to repay its commercial paper primarily with bank borrowings.
Because its current liquidity needs exceed sources, we view
Sharp's liquidity position as 'less than adequate.' Under our
ratings criteria, we assign an issuer credit rating no higher
than 'BB+' to a company with 'less than adequate' liquidity," S&P
said.
The TCR-AP reported on Aug. 7, 2012, that Moody's Investors
Service downgraded its short-term ratings on Sharp Corporation
and its supported subsidiaries, Sharp International Finance (UK)
plc and Sharp Electronics Corporation, to Prime-3 from Prime-2.
The ratings remain under review for further downgrade. The rating
action reflects Moody's increasing concern that the company's
weak operating performance and additional restructuring costs
will continue to pressure its cash flow downwards, thereby
increasing its dependence on external sources for liquidity.
SHARP CORP: To Withdraw Solar Battery Biz in U.S. and Europe
------------------------------------------------------------
Kyodo News reports that Sharp Corp. intends to withdraw from the
solar battery business in the United States and Europe as the
consumer electronics maker tries to streamline its money-losing
operations, according to its restructuring plan.
In Japan, the news agency notes, Sharp is looking to sell its
solar battery manufacturing facilities in Nara, Osaka and Toyama
prefectures to consolidate production at its plant in Sakai,
Osaka Prefecture.
Kyodo says Sharp, a top manufacturer of solar batteries, will
basically discontinue production and sales of such products by
the end of March in the U.S. and European markets, where it has
been incurring losses due partly to fierce competition from
Chinese and other rivals.
The company is determined to focus its resources mainly at home
as well as India and China, where strong growth is expected. In
the domestic market, Sharp is eager to lift its market share of
solar batteries for households to more than 40% from the current
30%, according to the plan cited by Kyodo.
According to Kyodo, the plan, obtained earlier last week, reveals
that Sharp will sell the Katsuragi plant in Nara Prefecture and
the Yao plant in Osaka Prefecture by around the end of March,
while ending operations at its plant in Toyama Prefecture in the
first half of the business year starting next April.
About Sharp Corporation
Based in Osaka, Japan, Sharp Corporation (TYO:6753) --
http://sharp-world.com/-- manufactures and sells
electronic telecommunication devices, electronic machines and
components.
As reported in the Troubled Company Reporter-Asia Pacific on
Sept. 4, 2012, Standard & Poor's Ratings Services lowered to
'BB+' its long-term corporate credit and senior unsecured debt
ratings on Sharp Corp. and its overseas subsidiaries, Sharp
Electronics Corp. and Sharp International Finance (U.K.) PLC. "At
the same time, we lowered our short-term ratings on the companies
to 'B' from 'A-2'. We kept Sharp's long- and short-term ratings
on CreditWatch with negative implications," S&P said.
"Sharp's liquidity position is weakening, in Standard & Poor's
view. Internal cash flow remains weak, and financial market
conditions for the company have deteriorated. The company has
forecast an expected JPY250 billion net loss for fiscal 2012
(ending March 31, 2013), exceeding its budgeted depreciation
expense of JPY200 billion. As of June 30, 2012, Sharp had a high
dependence on short-term borrowings. It had JPY336 billion in
short-term debt and JPY362 billion in commercial paper. In recent
weeks, the company has faced unfavorable financial market
conditions, as evidenced by a recent rise in spreads on credit
default swaps, which has added to its difficulty in issuing new
commercial paper. Weak internal cash flow has forced the company
to repay its commercial paper primarily with bank borrowings.
Because its current liquidity needs exceed sources, we view
Sharp's liquidity position as 'less than adequate.' Under our
ratings criteria, we assign an issuer credit rating no higher
than 'BB+' to a company with 'less than adequate' liquidity," S&P
said.
The TCR-AP reported on Aug. 7, 2012, that Moody's Investors
Service downgraded its short-term ratings on Sharp Corporation
and its supported subsidiaries, Sharp International Finance (UK)
plc and Sharp Electronics Corporation, to Prime-3 from Prime-2.
The ratings remain under review for further downgrade. The rating
action reflects Moody's increasing concern that the company's
weak operating performance and additional restructuring costs
will continue to pressure its cash flow downwards, thereby
increasing its dependence on external sources for liquidity.
=========
K O R E A
=========
WOONGJIN HOLDINGS: Drops Plan to Sell $1.1B Stake in Coway Unit
---------------------------------------------------------------
Richard Vanderford at Bankruptcy Law360 reports that South
Korea's Woongjin Holdings Co. has reportedly dropped plans to
sell a stake in water purification company Woongjin Coway to
private equity group MBK Partners for $1.1 billion after filing
for bankruptcy Wednesday.
Bankruptcy Law360 relates that the Korea Times reported Woongjin
backed out of a deal to sell Coway because of liquidity problems
that led the company to file for receivership in Seoul Central
District Court.
Based in Korea, Woongjin Holdings Co., Ltd., engages in the
management of its subsidiaries. Its subsidiaries include
Woongjin Coway Co., Ltd., which engages in the rental and sale of
water purifiers, air cleaners, bidets, food waste treatment
equipment and others.
====================
N E W Z E A L A N D
====================
MARAC INSURANCE: S&P Gives 'BB+' Financial Strength Rating
----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' financial
strength and issuer credit ratings to New Zealand-based insurer
MARAC Insurance Ltd. The rating outlook is stable.
"The financial strength and issuer credit ratings on MIL reflect
our view of the insurer's stand-alone credit profile (SACP), as
well as its strategic importance to the group of companies
operating under the listed financial services group, Heartland
New Zealand Ltd. (HNZL; not rated)," said Standard & Poor's
credit analyst Caroline Strahan.
"We consider the insurer's SACP to be modest because of its small
and concentrated earnings base, with earnings primarily sourced
from sales of two insurance products to an affiliated motor
vehicle dealer network in New Zealand. Factors supporting its
SACP include its satisfactory risk-based capitalization,
conservative asset allocation, and maintenance of a good
liquidity position," S&P said.
"Under our group-rating methodology, we have assessed MIL as a
'strategically important' subsidiary of HNZL. Consequently, its
rating is capped one notch below HNZL's group credit profile
(GCP) of 'BBB-'. HNZL's GCP is equalized with the rating on
Heartland Building Society (HBS; BBB-/Stable/--), as HBS
represents the overwhelming majority of the group's aggregate
assets, liabilities, equity, and revenue," S&P said.
MIL is a joint-venture arrangement between The New Zealand
Automobile Association Ltd. (NZAAL; not rated), a subsidiary of
The New Zealand Automobile Association (NZAA; not rated), and
Heartland Financial Services Ltd. (HFSL; not rated), which is
wholly owned by HNZL. The arrangement came into effect in April
2010, and each joint-venture partner owns 50%. Prior to the
merger within the HNZL group in 2010, MIL was incorporated in
2005 as a wholly owned subsidiary of MARAC Financial Services
Ltd. (MFSL; not rated).
"The stable outlook on the ratings for MIL is aligned with the
stable outlook on HBS, which currently drives our view of the GCP
on which the rating on MIL is based. If the rating on HBS were to
be raised, MIL is likely to be upgraded. However, a downgrade on
HBS may not necessarily lead to a lower rating on MIL, depending
on the extent of the downgrade and our opinion of MIL's
insulation from the group," S&P said.
Ms. Strahan added: "Our stable outlook on MIL also reflects our
view that it will remain at least a strategically important
subsidiary of HNZL and that its SACP will not deteriorate
significantly beyond its currently modest level. We may downgrade
our view of MIL's strategic importance to HNZL if the insurer
does not perform to group management's expectations, or if there
is some likelihood HNZL may divest MIL in the medium term.
Alternatively, we could revise our view of its group status to
'core' and equalize its rating with that on HNZL if we believe
the insurer has become more integral to HNZL's operations and
strategy, and HNZL is able to exert more control than its joint
ownership indicates."
=================
S I N G A P O R E
=================
3Q INTERIOR: Court to Hear Wind-Up Petition Oct. 5
--------------------------------------------------
A petition to wind up the operations of 3Q Interior Design &
Concepts Pte Ltd will be heard before the High Court of Singapore
on Oct. 5, 2012, at 10:00 a.m.
United Overseas Bank Limited filed the petition against the
company on Sept. 13, 2012.
The Petitioner's solicitors are:
Rajah & Tann LLP
9 Battery Road, #25-01
Straits Trading Building
Singapore 049910
ABLTRON (S): Court to Hear Wind-Up Petition Oct. 12
---------------------------------------------------
A petition to wind up the operations of Abltron (S) Pte Ltd will
be heard before the High Court of Singapore on Oct. 12, 2012, at
10:00 a.m.
Lee Sian Faat filed the petition against the company on Sept. 18,
2012.
The Petitioner's solicitors are:
Messrs. Wong Tan & Molly Lim LLC
80 Robinson Road #17-02
Singapore 068898
BORDERS PTE: Creditors' Proofs of Debt Due Oct. 8
-------------------------------------------------
Creditors of Borders Pte Ltd, which is in compulsory liquidation,
are required to file their proofs of debt by Oct. 8, 2012, to be
included in the company's dividend distribution.
The company's liquidator is:
Timothy James Reid
c/o Ferrier Hodgson
8 Robinson Road
#12-00 ASO Building
Singapore 048544
CHINA FOODZART: Court to Hear Wind-Up Petition Oct. 12
------------------------------------------------------
A petition to wind up the operations of China Foodzart
International Private Limited will be heard before the High Court
of Singapore on Oct. 12, 2012, at 10:00 a.m.
Nelly Menon, Goh Mui Joo, Chua Soo Huan Linda and
Lai Voon Nee filed the petition against the company on Sept. 20,
2012.
The Petitioner's solicitors are:
Shook Lin & Bok LLP
1 Robinson Road #18-00
AIA Tower, Singapore 048542
EW JUBILEE: Creditors' Proofs of Debt Due Oct. 29
-------------------------------------------------
Creditors of EW Jubilee Pte Ltd, which is in compulsory
liquidation, are required to file their proofs of debt by
Oct. 29, 2012, to be included in the company's dividend
distribution.
The company's liquidator is:
Chian Yeow Hang
c/o Abacus Advisory Services Pte Ltd
6001 Beach Road
#09-09 Golden Mile Tower
Singapore 199589
PACNET LTD: Fitch Affirms 'B+' IDR; Outlook Negative
----------------------------------------------------
Fitch Ratings has affirmed Pacnet Limited's Long-Term Issuer
Default Rating (IDR) at 'B+' with a Negative Outlook. Fitch has
also affirmed the company's guaranteed USD300m senior secured
notes due Nov. 9, 2015, at 'BB+' with a Recovery Rating of 'RR1'.
The telecoms company has dual headquarters in Hong Kong and
Singapore.
The rating is constrained by Pacnet's small operational scale and
slow EBITDA growth in the highly competitive submarine cable
business. Its 2011 EBITDA of just USD78m is small compared with
other global telecom service providers rated by Fitch and the
agency does not expect any significant expansion in Pacnet's
operational scale in the medium- to long-term.
The Negative Outlook reflects Fitch's view that the company's
financial profile is unlikely to show a meaningful improvement
due to continued price erosion in bandwidth capacity despite
solid demand growth, and a lack of significant contribution from
the data centre business. It also reflects the risk that the
company may breach the financial covenant in its USD50m credit
facility in 2013 if it fails to renegotiate with its creditor
banks. The USD50m credit facility comprises a USD30m term loan
facility and a USD20m revolving credit facility.
For H112, Pacnet recorded slow yoy growth in revenue to USD267m
(H111: USD259m), and in EBITDA to USD38m (USD36m). In addition,
the company's free cash flow (FCF) continued to be negative due
to high capex in H112 and 2011 and Fitch does not forecast this
trend to reverse over the medium term. The agency therefore
forecasts the company's funds flow from operations (FFO) adjusted
net leverage will rise towards 4x by end-2012 from 3.5x at end-
2011.
Fitch believes that, based on the agency's current forecast, the
company will struggle to meet the debt cover ratio covenant in
the USD50m credit facility when the covenant tightens from 2013.
Under the facility documentation, the debt cover ratio, measured
by adjusted debt/EBITDA, will fall to 4.0x in 2013 from 4.3x in
2012. An un-remedied breach of the covenant may lead to
acceleration of the facility and the USD bonds. Fitch believes
that the company is seeking to renegotiate the covenant with its
creditor banks. Failure to do so in a timely manner would
negatively affect the company's ratings.
Pacnet's liquidity remains comfortable, underpinned by its cash
balance of USD84m at end-H112 and limited debt maturities before
end-2014. Fitch does not foresee any serious liquidity risks in
the short term despite ongoing negative FCF and the upcoming
expiry of the USD20m revolving facility in November 2012.
The 'RR1' Recovery Rating on the guaranteed notes reflects an
expected value recovery of above 90% for bondholders in the event
of default, based on Fitch's assessment of Pacnet's value in a
stressed scenario.
What Could Trigger A Rating Action?
Negative: Future developments that may, individually or
collectively, lead to negative rating action include
-- FFO-adjusted net leverage rising over 4x and FFO fixed
charge coverage falling below 2x on a sustained business
-- failure to renegotiate the financial covenants in the credit
facility in a timely manner
Positive: Future developments that may, individually or
collectively, lead to positive rating action include
-- FFO fixed charge coverage rising above 2x, and FFO-adjusted
net leverage falling below 4x on a sustained basis
=============
V I E T N A M
=============
* S&P Lifts Counterparty Credit Ratings on 3 Vietnam Banks to BB-
-----------------------------------------------------------------
Standard & Poor's Ratings Services had taken rating actions on
several Vietnamese banks after the revision of the Banking
Industry Country Risk Assessment (BICRA) on Vietnam (BB-
/Stable/B) to group '9' from group '10'. "As a result of the
revision of our
BICRA on Vietnam, the anchor for a commercial bank operating only
in Vietnam is revised to 'b+' from 'b'. We also raised the stand-
alone credit profiles (SACP) of all rated banks in Vietnam by one
notch," S&P said.
Ratings List
Upgraded
To From
Bank for Foreign Trade of Vietnam
Counterparty Credit Rating BB-/Stable/B B+/Stable/B
Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank)
Counterparty Credit Rating BB-/Stable/B B+/Stable/B
Vietnam Technological And Commercial Joint Stock Bank
Counterparty Credit Rating BB-/Stable/B B+/Stable/B
ASEAN Regional Scale axBB+/axB axBB/axB
Affirmed
Bank for Investment and Development of Vietnam
Counterparty Credit Rating B+/Stable/B
ASEAN Regional Scale axBB/axB
Vietnam Joint Stock Commercial Bank for Industry and Trade
Counterparty Credit Rating B+/Stable/B
"We revised our BICRA on Vietnam because we believe that the
risks of economic imbalances in Vietnam have subsided. The policy
actions that the Vietnam government initiated in 2011 have
moderated the pace of loan growth and improved asset price
stability. A tight credit policy slowed loan growth to 14.5% in
2011 from 28% on average in the previous four years. Lending
restrictions on 'non-productive' sectors -- mainly property lending
and securities lending -- contributed to a reduction in real asset
prices. These developments have halted or reversed a
deterioration in key risk indicators. Inflation has retreated to
6.5% as of September 2012, from a peak of 23% in August 2011,
which helped the central bank reduce policy rates and led to a
moderation in lending rates," S&P said.
"Despite these improvements, potential risks of economic
imbalances in Vietnam remain. The government has eased its policy
stance to accommodate its growth objectives, and risks renewing
concerns about its commitment to price stability. Any aggressive
expansionary stance will heighten imbalances from private sector
leverage. The process of restoring confidence in the banking
system and monetary policy is in an early phase and calls for
careful management, especially when nonperforming loans are
rising," S&P said.
"The rating on Bank for Foreign Trade of Vietnam reflects the
bank's 'strong' business position, 'weak' capital and earnings,
'adequate' risk position, 'above average' funding, and 'adequate'
liquidity, as our criteria define those terms. We revised the
SACP of the bank to 'bb-' from 'b+'. We believe that the bank has
'high systemic importance' in Vietnam and assess the Vietnam
government as 'highly supportive.' Nonetheless, we do not factor
any extraordinary government support into the rating because the
bank's SACP is already at par with the local currency sovereign
rating on Vietnam," S&P said.
The rating on Sacombank reflects the bank's "strong" business
position, "weak" capital and earnings, "adequate" risk position,
"above-average" funding, and "adequate" liquidity. "We revised
the SACP of the bank to 'bb-' from 'b+'," S&P said.
The rating on Vietnam Technological And Commercial Joint Stock
Bank reflects the bank's "strong" business position, "weak"
capital and earnings, "adequate" risk position, "above-average"
funding, and "adequate" liquidity. "We revised the SACP of the
bank to 'bb-' from 'b+'," S&P said.
The rating on Bank for Investment and Development of Vietnam
(BIDV) reflects the bank's "strong" business position, "very
weak" capital and earnings, "adequate" risk position, "average"
funding, and "adequate" liquidity. "We revised the SACP of the
bank to 'b+' from 'b'. We believe that BIDV has 'high systemic
importance' in Vietnam and assess the Vietnam government as
"highly supportive." Nonetheless, we do not factor any
extraordinary government support into the rating because the
bank's SACP is already one notch below the local currency
sovereign rating on Vietnam," S&P said.
The rating on Vietnam Joint Stock Commercial Bank for Industry
and Trade (Vietinbank) reflects the bank's "strong" business
position, "very weak" capital and earnings, "adequate" risk
position, "average" funding, and "adequate" liquidity. "We
revised the SACP of the bank to 'b+' from 'b'. We believe that
Vietinbank has 'high systemic importance' in Vietnam and assess
the Vietnam government as 'highly supportive'. Nonetheless, we do
not factor any extraordinary government support into the rating
because the bank's SACP is already one notch below the local
currency sovereign rating on Vietnam," S&P said.
*********
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, Ivy B. Magdadaro, Frauline S.
Abangan, and Peter A. Chapman, Editors.
Copyright 2012. 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
Peter Chapman at 240/629-3300.
*** End of Transmission ***