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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
Wednesday, September 18, 2013, Vol. 16, No. 185
Headlines
A U S T R A L I A
MITAKOODI ABORIGINAL: Placed Under Special Administration
C H I N A
GREENTOWN CHINA: New Sr. Unsecured Notes Gets Moody's B2 Rating
GREENTOWN CHINA: S&P Assigns 'B+' Rating to US$ Sr. Unsec. Notes
WUZHOU INTERNATIONAL: Fitch Assigns 'B' Issuer Default Rating
I N D I A
AMBEY CONSTRUCTION: CRISIL Cuts Ratings on INR250MM Loans to 'D'
ASSOCIATED TOOLINGS: CRISIL Cuts INR104.3MM Loan Ratings to 'BB+'
ATC FOODS: CRISIL Upgrades Rating on INR140MM Loan to 'B+'
EYLEX FILMS: CRISIL Cuts Rating on INR125.6MM Term Loan to 'D'
FRENDI FASHIONS: CRISIL Rates INR20MM Overdraft Facility at 'B+'
INTEGRAL BIOSCIENCES: CRISIL Ups Ratings on INR150M Loans to 'BB'
K G CABLES: CRISIL Lowers Ratings on INR245MM Loans to 'D'
M. K. STONE: CRISIL Assigns 'D' Ratings to INR74MM Loans
NANAK HI-TECH: CRISIL Lowers Ratings on INR147.4MM Loans to 'D'
R.B.CREATION: CRISIL Downgrades Ratings on INR40.5MM Loans to 'C'
ROSE PREMISES: CRISIL Downgrades Rating on INR200MM Loan to 'D'
SARVESH SPINNERS: CRISIL Cuts Ratings on INR122MM Loans to 'B+'
SHAKTI SPINNERS: CRISIL Cuts Ratings on INR70MM Loans to 'D'
SREE NIVAS: CRISIL Downgrades Rating on INR250MM Loan to 'D'
S.S. CONSTRUCTION: CRISIL Cuts Rating on INR48MM Loan to 'B-'
TECHNOMAX BUILDING: CRISIL Cuts Ratings on INR152.8M Loans to 'D'
ZODIAC INFRASTRUCTURES: CRISIL Rates INR66MM Cash Credit at 'B-'
I N D O N E S I A
APEXINDO PRATAMA: Moody's Assigns (P)Ba3 CFR; Outlook Stable
J A P A N
JAPAN: Success of Abenomics is Crucial for Mega-Bank Performance
N E W Z E A L A N D
WILLESTON LTD: Office Block Put Up For Sale
P H I L I P P I N E S
RURAL BANK OF STO. TOMAS: Placed Under PDIC Receivership
* PHILIPPINES: Only 20 Preneed Firms Remain Out of 200
S O U T H K O R E A
* Restaurant Boom Bodes Ill for Korea Economy, WSJ Reports
X X X X X X X X
* Upcoming Meetings, Conferences and Seminars
- - - - -
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A U S T R A L I A
=================
MITAKOODI ABORIGINAL: Placed Under Special Administration
---------------------------------------------------------
Kate Stephens at ABC News reports that Mitakoodi Aboriginal
Corporation (MAC) at Cloncurry in north-west Queensland has been
placed under special administration for the second time in two
years.
ABC says Indigenous Corporations registrar Anthony Beven made the
decision after the corporation allowed three tenants to move back
into a property after they were evicted by independent property
managers LJ Hooker.
According to the report, Mr. Beven said the corporation needs help
with its direction.
The MAC, which provides affordable housing to Aboriginal and
Torres Strait Islanders in the Cloncurry area, east of Mount Isa,
was placed under the control of a special administrator in 2011
for about five months due to financial issues, ABC recalls.
The administration period is expected to last for three to six
months, the report notes.
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C H I N A
=========
GREENTOWN CHINA: New Sr. Unsecured Notes Gets Moody's B2 Rating
---------------------------------------------------------------
Moody's Investors Service has assigned a B2 rating to the proposed
senior unsecured notes to be issued by Greentown China Holdings
Limited.
At the same time, Moody's has affirmed Greentown's B1 corporate
family rating and B2 senior unsecured ratings.
The ratings outlook remains positive.
The company will use the proceeds from the notes issuance for
refinancing short term debt, funding capital expenditures and
other general corporate purposes.
Ratings Rationale:
"The ratings primarily reflect Greentown's well-established market
position in property development in Zhejiang Province, on the back
of its sound brand name, quality products, and large land bank.
The rating also factors in the company's improved financial
profile and more prudent approach to financial management after
the strategic investment by Wharf (Holdings) Limited (unrated),"
says Jiming Zou, a Moody's Assistant Vice President and Analyst.
But, these strengths are balanced by the challenges associated
with the company's significant exposure to luxury residential
properties, which face purchase restrictions and tight credit
conditions.
The B2 bond rating also reflects legal and structural
subordination risks. The company has substantial onshore
borrowings at the PRC subsidiary/project level to fund its
operation and investments.
"The notes issuance, if it is completed, will help Greentown
strengthen its liquidity through extending its debt maturity and
increasing its cash reserve. This situation will also help
accelerate the development and completion of the company's
property projects," says Zou.
Moody's expects Greentown's debt/capitalization ratio to increase
to about 59% at end-2013 from 54% at end-June 2013, after this
proposed notes issuance, as well as the recently announced USD300
million in syndicated loans. However, this increase has already
been reflected in its ratings and positive outlook.
The company recorded RMB38.3 billion in contract sales in the
first eight months of 2013, up 41% YoY. Despite the negative
impact of increased debt, such robust sales will limit the
deterioration in its EBITDA/interest to about 3.5x in 2013 versus
3.8x for the last twelve months until June 2013. This level
strongly positions the company at its ratings.
The ratings outlook is positive, reflecting Moody's expectation
that Greentown will continue to improve sales execution and
strengthen liquidity in the next 18 months.
Upgrade pressure could emerge if Greentown (i) establishes a track
record of acceptable credit metrics -- adjusted
debt/capitalization below 50%-55% and EBITDA/interest above 3.5-
4.0x; (ii) continues to show good sales execution and meets its
presales targets; and (iii) maintains an adequate liquidity
position due to its prudent approach to financial and land
investment management.
The outlook could return to stable, if Greentown (i) cannot
achieve ongoing improvements in liquidity; (ii) shows a weakening
in sales or embarks on further land acquisitions which cause a
deterioration in its financial profile - debt/capitalization above
55%-60% and EBITDA/interest below 3.0x.
The principal methodology used in this rating was the Global
Homebuilding Industry Methodology published in March 2009.
Greentown China Holdings Limited is one of China's major property
developers, with a primary focus on Hangzhou city and Zhejiang
Province. At end-June 2013, the company had 99 projects, including
those under construction and available for construction, with a
total GFA 41.39 million sqm. Of this total, 21.96 million sqm were
attributable to the company.
GREENTOWN CHINA: S&P Assigns 'B+' Rating to US$ Sr. Unsec. Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' long-term
issue rating and 'cnBB' long-term Greater China regional scale
rating to a proposed issue of U.S. dollar-denominated senior
unsecured notes by Greentown China Holdings Ltd. (BB-/Stable/--;
cnBB+/--).
The Chinese property developer intends to use the issuance
proceeds to refinance some existing short-term debts, to fund
capital expenditures, and for general corporate purposes.
The issue rating is one notch below the long-term corporate credit
rating on Greentown to reflect S&P's opinion that offshore
noteholders would be materially disadvantaged, compared with
onshore creditors, in the event of default. S&P anticipates that
the company's ratio of priority debt to total assets will continue
to be above S&P's threshold of 15% for speculative-grade
companies.
S&P expects only a moderate increase in debt after the proposed
bond issuance because the company will use part of the proceeds to
refinance its existing debt. The higher debt level is still
within S&P's base-case projection for borrowings.
The rating on Greentown reflects the company's longer-than-average
construction period, short record of consistent financial
management, weak cost control, and its significant related-party
transactions and affiliates debt. Greentown's strong presence in
Hangzhou and Zhejiang Province, its established high-end and
quality brand name, and support from second-largest shareholder,
Wharf (Holdings) Ltd., on the company's business and financial
side mitigate those weaknesses.
The stable outlook on the long-term corporate credit rating
reflects S&P's expectation that Greentown will be cautious in
expanding and can increase sales while maintaining satisfactory
margins. S&P expects the company to be able to maintain its
leverage below 5x debt to EBITDA, which is consistent with its
assessment for an "aggressive" financial risk profile.
WUZHOU INTERNATIONAL: Fitch Assigns 'B' Issuer Default Rating
-------------------------------------------------------------
Fitch Ratings has assigned China-based commercial property
developer Wuzhou International Holdings Limited (Wuzhou) a Long-
Term Issuer Default Rating (IDR) of 'B' with Stable Outlook and a
senior unsecured rating of 'B'. Fitch has also assigned Wuzhou's
proposed USD senior unsecured notes an expected rating of
'B(EXP)'.
The notes are rated at the same level as Wuzhou's senior unsecured
rating as they represent direct, unconditional, unsecured and
unsubordinated obligations of the company. The final rating of the
proposed notes is contingent upon receipt of documents conforming
to information already received.
Key Rating Drivers
Small-scale property developer: Wuzhou's rating is constrained by
its small scale compared with Fitch-rated peers. With historical
contracted sales of CNY1.2bn, CNY2.1bn and CNY2.8bn in 2010-2012,
Wuzhou is still a small property developer in China. It faces
concentration risk with 55% of its contracted sales in H113
derived from Jiangsu province and seven out of 11 of its completed
projects in Wuxi. It remains to be seen whether Wuzhou can
successfully transfer its business model from Wuxi into other
cities in China. As the number of projects under management
increases across different provinces, it will be challenging for
the company to maintain a high-quality tenant mix in each project.
Volatile commercial property sales: As a commercial property
developer in China, Wuzhou is exposed to higher risk than
residential property developers. Commercial property sales mainly
target investment demand, which can be adversely affected during
economic downturns or in an environment of tighter liquidity.
Investment demand is also highly dependent on brand reputation,
which is susceptible to operating performance of existing
projects. In general, cash flow projection from property sales is
less predictable for commercial property developers, compared with
residential property developers.
Strong commercial sites limited: With a longer list of
requirements, including high foot traffic, easy accessibility and
high residents' income levels, commercial property sites with
strong development potential are harder to come by than
residential sites. Wuzhou's upcoming projects are mostly situated
in third-tier cities. While the company enjoyed low land cost
(typically a few hundred CNY/sqm), it faces the risk of whether
there will be enough consumption demand in third-tier cities to
support retail outlets in the projects.
Operational success in Wuxi: Wuzhou has completed two wholesale
markets and five mixed-use commercial complexes in Wuxi,
establishing a critical mass in its hometown. Wuzhou has been
successful in selling the majority (80%-90%) of its project space
on a strata-title basis and keeping the remainder for lease
income. The company actively manages the tenant mix for shop
buyers after the projects open and its properties enjoy an average
occupancy rate of above 90%. Capitalising on its success and
experience in Wuxi, Wuzhou is now expanding in the eastern,
central, south-western and north-eastern parts of China. With a
quick churn-out business model, Wuzhou targets to grow its
contracted sales to CNY5bn in 2013 from CNY2.8bn in 2012. Wuzhou
recorded contracted sales of CNY2.8bn in the year to August 2013,
up 76% yoy.
After-sale tenant-mix management: Wuzhou differentiates itself
from other commercial property developers by providing after-sale
tenant-mix management and negotiating leases with prospective
tenants on behalf of shop owners. In return, Wuzhou charges shop
owners a commercial management service fee. The fee is equal to
100% of the rental value in the first three years of the lease and
then 8%-10% of the rental value in the fourth year onwards. If
Wuzhou can continue maintaining an optimal tenant mix and high
occupancy rates in its existing projects, it could enhance its
brand reputation and attract more buyers to its future projects.
Strong network of buyers: Wuzhou's founder, Mr. Shu Cecheng, was
in the trading and manufacturing business before turning to
property development in 2004. Mr. Shu has an extensive business
network, which offers Wuzhou a pool of potential tenants and shop
buyers, especially in wholesale markets. This is crucial to Wuzhou
as it relies heavily on project sales, which generate cash and
enable the company to replenish its land bank quickly.
Sufficient liquidity: Fitch expects Wuzhou to have sufficient
liquidity to cover its short-term debts. As at mid-2013, Wuzhou
had CNY1.8bn of cash (of which CNY377m was restricted cash and
pledged deposits) and CNY1.6bn in undrawn credit facilities. That
is more than enough to cover its CNY835m debt to be repaid in the
coming 12 months. However, Wuzhou's financial flexibility is
limited because all of its debt is secured debt. The company plans
to diversify its funding sources and reduce its reliance on
secured debt. Also, the company plans to reduce the proportion of
trust loans in its portfolio to less than 25% in the next one-two
years from 33% as of end-H113 to reduce its overall borrowing
costs.
Rating Sensitivities
Positive: Future developments that may collectively lead to
positive rating actions include:
-- Annual contracted sales sustained above CNY8bn while
maintaining current margins and credit metrics, and
-- Increase in geographical diversification by establishing its
presence in a greater number of provinces, and
-- Satisfactory operating conditions for completed projects, in
particular for those that have been open for more than three
years
Negative: Future developments that may, individually or
collectively, lead to negative rating action include
-- A significant reduction in annual contracted sales
-- Deviation from the current fast churn-out business model
-- Net debt/adjusted inventory being sustained above 40% (2012:
31%)
-- EBITDA margin staying below 20% on a sustained basis (2012:
32%)
-- Contracted sales/ total debt staying below 1.0x on a sustained
basis (2012: 1.2x)
Headquartered in Wuxi in Jiangsu province, Wuzhou is a commercial
property developer focusing on specialised wholesale market and
multi-functional commercial complexes in the second- and third-
tier cities in China.
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I N D I A
=========
AMBEY CONSTRUCTION: CRISIL Cuts Ratings on INR250MM Loans to 'D'
----------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Ambey
Construction Co. to 'CRISIL D/CRISIL D' from 'CRISIL B-
/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 40 CRISIL D (Downgraded from
'CRISIL A4')
Cash Credit 120 CRISIL D (Downgraded from
'CRISIL B-/Stable')
Proposed Cash Credit 90 CRISIL D (Downgraded from
Limit 'CRISIL B-/Stable')
The rating downgrade reflects delays by Ambey in meeting the
interest obligation on its cash credit facility. Further, Ambey
has not furnished stock and debtor statements, required to avail
cash credit facility, to the bank over the past few months.
Ambey has a weak financial risk profile, marked by high gearing
and moderate debt protection metrics, and small scale of
operations in the intensely competitive construction industry.
However, Ambey benefits from its promoters' established track
record in the construction industry.
Ambey was established as a partnership firm in 2008, promoted by
Mr. Puneet Garg and the Singla family of Bhatinda (Punjab). Singla
Engineers and Contractors Pvt Ltd is the flagship company of the
Singla group. Ambey is engaged in road and bridge construction,
mainly on sub-contractor basis, in Punjab and Haryana.
ASSOCIATED TOOLINGS: CRISIL Cuts INR104.3MM Loan Ratings to 'BB+'
-----------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
Associated Toolings (India) Pvt Ltd to 'CRISIL BB+/Stable/CRISIL
A4+'from 'CRISIL BBB-/Stable/CRISIL A3'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 81 CRISIL BB+/Stable (Downgraded
from 'CRISIL BBB-/Stable')
Term Loan 23.3 CRISIL BB+/Stable (Downgraded
from 'CRISIL BBB-/Stable')
Bank Guarantee 37.0 CRISIL A4+ (Downgraded from
'CRISIL A3')
Letter of Credit 10.0 CRISIL A4+ (Downgraded from
'CRISIL A3')
The downgrade reflects the deterioration in ATIPL's business risk
profile, marked by decline in sales in 2012-13 (refers to
financial year, April 1 to March 31) and continued pressure on
demand in the end-user industry. ATIPL's sales declined to INR232
million in 2012-13 from INR265 million in 2011-12, against
CRISIL's past expectations of robust growth in the company's scale
of operations. The lower demand is on account of slower capacity
expansion in the oil and gas and power sectors, which are ATIPL's
primary customer segment. CRISIL believes that ATIPL's business
risk profile and scale of operations will remain constrained over
the medium term.
The ratings reflect the benefits that ATIPL derives from its
promoters' extensive experience and its established position in
the industrial valve manufacturing industry. The ratings also
reflect the company's above-average financial risk profile, marked
by its conservative gearing and robust debt protection metrics,
albeit with a modest net worth. These rating strengths are
partially offset by ATIPL's modest scale of operations and the
intense competition and muted demand scenario in the industrial
valves segment.
Outlook: Stable
CRISIL believes that ATIPL's business risk profile will remain
constrained on account of muted demand from its end-user industry.
CRISIL, however, believes that ATIPL will continue to benefit from
its established market position and the extensive experience of
its promoters in the valve manufacturing industry. The outlook may
be revised to 'Positive' in case the company significantly
increases its revenues, while maintaining its profitability
margin, in case of significant infusion of long-term funds by its
promoters. Conversely, the outlook may be revised to 'Negative' in
case ATIPL's financial risk profile deteriorates, due to any
stretch in its working capital cycle or higher-than-expected
capital expenditure (capex).
ATIPL, set up in 1973, manufactures both fluid and gas valves and
regulators, which are used in refineries, petrochemicals
companies, the oil and gas sector, thermal power stations, the
food processing industry, and the dairy industry, among others.
The company has its manufacturing facilities at Howrah (West
Bengal). ATIPL's overall operations are being managed by Mr. Ratan
Jyoti Bishnu and Mr. Anup Kanti Karmakar.
On a provisional basis, ATIPL reported a profit after tax (PAT) of
INR7.7 million on net sales of INR232.5 million for 2012-13
(refers to financial year, April 1 to March 31), against a PAT of
INR10.1 million on net sales of INR265 million for 2011-12.
ATC FOODS: CRISIL Upgrades Rating on INR140MM Loan to 'B+'
----------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facility of
ATC Foods Pvt Ltd to 'CRISIL B+/Stable' from 'CRISIL B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 140 CRISIL B+/Stable (Upgraded from
'CRISIL B/Stable')
The rating upgrade reflects ATC's improved business risk profile
on account of increase in the company's scale of operations and
improvement in liquidity. ATC has registered significant increase
in its scale of operations with its turnover increasing by 2.19
times over the past two years through 2012-13 (refers to financial
year, April 1 to March 31). The operating income of the company
has increased to INR3017 million in 2012-13 from INR1294 million
in the previous year. This increase is partly driven by increase
in milling capacity and increase in sales realisation. The rating
upgrade also reflects ATC's improved liquidity, driven by higher
cash accruals. With increase in the turnover, the company has
maintained its operating profitability; the cash accruals of the
company increased to INR20.5 million in 2012-13 from INR4.8
million in the previous year. In 2013-14, ATC is expected to
generate cash accruals of INR21.8 million vis-a-vis its minimal
vehicle loan obligations of INR0.15 million over the same period.
The company's liquidity is also supported by unsecured loans of
INR33.5 million as on March 31, 2013 from promoters along with
equity infusion of INR33 million in 2012-13.
The rating continues to reflect ATC's weak financial risk profile
marked by a high gearing, a small net worth, and weak debt
protection metrics. This rating weakness is partially offset by
the extensive industry experience of ATC's promoters and the
benefits that the company is expected to derive from the healthy
growth prospects of the rice industry.
Outlook: Stable
CRISIL believes that ATC's financial risk profile will remain weak
over the medium term because of the company's working-capital-
intensive operations and low net cash accruals. The outlook may be
revised to 'Positive' in case ATC registers substantial
improvement in its financial risk profile, most likely because of
equity infusion by its promoters and increase in its profitability
and scale of operations. Conversely, the outlook may be revised to
'Negative' if ATC registers deterioration in its capital structure
or pressure on its profitability.
ATC, set up in 1980, mills, processes, and sells basmati rice. It
produces polished as well as unpolished rice that is sold to
exporters in India. The company derives 5 per cent of its revenues
from domestic sales under its own brand, Sohni. ATC has also
entered into a job-work agreement in September 2011 with Shri
Ganesh Agro Foods, which has a parboiling unit for milling 80
tonnes per day (tpd) of rice. The agreement has led to ATC
increasing its total milling capacity to 180 tpd of rice.
ATC reported, on a provisional basis, a profit after tax (PAT) of
INR18.2 million on net sales of INR3017 million for 2012-13,
against a PAT of INR2.5 million on net sales of INR1293 million
for 2011-12.
EYLEX FILMS: CRISIL Cuts Rating on INR125.6MM Term Loan to 'D'
--------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility of
Eylex Films Private Limited to 'CRISIL D' from 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 125.6 CRISIL D (Downgraded from
'CRISIL B+/Stable')
The downgrade reflects instances of delay by Eylex in servicing
its term loans; the delays have been caused by the company's weak
liquidity.
The rating also reflects Eylex's limited track record of
operations. This ratings weakness is partially offset by
promoter's experience in the entertainment industry.
Incorporated in 2009, Eylex screens films on a lease-and-operate
model. The company carries out its film-screening business in both
multi-screen and standalone theatres. EFPL is promoted by the
Jalan and Lohia families of Ranchi (Jharkhand).
FRENDI FASHIONS: CRISIL Rates INR20MM Overdraft Facility at 'B+'
----------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Frendi Fashions Pvt Ltd. The ratings
reflect Frendi's modest scale of operations in a highly fragmented
industry, revenue concentration risk, and large working capital
requirements. These rating weaknesses are partially offset by
Frendi's above-average financial risk profile marked by a healthy
gearing, and the extensive experience of the company's promoters
in the textiles industry.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Packing Credit 14 CRISIL A4
Packing Credit 35 CRISIL A4
Overdraft Facility 20 CRISIL B+/Stable
Bill Discounting 75 CRISIL A4
Foreign Letter of Credit 6 CRISIL A4
Outlook: Stable
CRISIL believes that Frendi will continue to benefit over the
medium term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if the company achieves a
sustained increase in its revenues, while it maintains its capital
structure, resulting in improvement in its liquidity. Conversely,
the outlook may be revised to 'Negative' if Frendi's capacity
utilisation and operating margin decline substantially or if the
company undertakes a large, debt-funded capital expenditure
programme, resulting in weakening of its financial risk profile.
Frendi was set up in 1992 as a proprietorship firm, and was
reconstituted as a private limited company in 1995. The company,
based in Chennai (Tamil Nadu), manufactures ready-made garments
(casual wear) and exports the same to the western market. Frendi's
day-to-day operations are managed by its managing director, Mr.
Dipak Raj.
Frendi reported a net profit of INR5.1 million on net sales of
INR235.2 million for 2011-12 (refers to financial year, April 1 to
March 31), against a net profit of INR5.5 million on net sales of
INR365.4 million for 2010-11.
INTEGRAL BIOSCIENCES: CRISIL Ups Ratings on INR150M Loans to 'BB'
-----------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank loan
facilities of Integral Biosciences Pvt Ltd to 'CRISIL BB/Stable'
from 'CRISIL BB-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 10.0 CRISIL BB (Upgraded from
'CRISIL BB-/Stable')
Term Loan 90.0 CRISIL BB (Upgraded from
'CRISIL BB-/Stable')
Proposed Term Loan 50.0 CRISIL BB (Upgraded from
'CRISIL BB-/Stable')
The rating upgrade reflects the improvement in IBPL's scale of
operations with the continuous increase in the research work for
its key customer, based in the US, over the past two years. The
rating upgrade also factors in the further increase expected in
the company's scale of operations following the proposed capacity
enhancement of its labs. The enhanced capacity is expected to have
assured offtake from its key customer, and is planned to be partly
funded by the increased realisations. Hence, CRISIL believes that,
despite this capital expenditure (capex), IBPL's financial risk
profile will remain moderate over the medium term.
The rating also reflects IBPL's cost-plus business model, ensuring
stable cash accruals, and its moderate finance risk profile,
marked by low gearing, moderate net worth, and healthy debt
protection metrics. These rating strengths are partially offset by
the company's exposure to risks related to concentration of
revenues in a single customer, and its small scale of operations.
IBPL has excluded from its asset value the grants received from
its US-based customer. For arriving at its rating, CRISIL has
considered these grants as part of IBPL's fixed-asset value.
CRISIL has also considered a portion of the grants, received in
the form of non-refundable advances, as part of IBPL's net worth;
the amount received by IBPL from its customer in the form of
refundable advances1 has been considered as part of advances from
the customer. As IBPL's agreement with its customer stipulates
that 20 per cent of such refundable advances would become non-
refundable at the end of each financial year, CRISIL has
considered such portions which become non-refundable as part of
IBPL's net worth at the end of each financial year. Depreciation
on the portion of fixed assets funded by the customer has been
adjusted against IBPL's capital reserve.
Outlook: Stable
CRISIL believes that IBPL will maintain its business risk profile
over the medium term supported by its healthy relationship with
its principal customer. The company's financial risk profile is
also expected to remain moderate, marked by low gearing and
healthy debt protection metrics, on the back of its increasing
cash accruals. The rating outlook may be revised to 'Positive' if
IBPL increases its scale of operations and net worth
significantly, while diversifying its customer profile.
Conversely, the outlook may be revised to 'Negative' if there is a
significant decline in IBPL's profitability, or if the company
undertakes a larger-than-expected debt-funded capex programme,
leading to deterioration in its financial risk profile, especially
its liquidity.
IBPL was set up as a joint venture in 2007 by Integral Biosciences
Inc and the Thakkar family (led by Mr. Ram Thakkar). IBPL, a 100
per cent export-oriented unit, commenced operations in July 2008
at its facility in Greater Noida (Uttar Pradesh). The company
mainly provides medicinal chemistry services on a contract basis
to an innovator company based in San Francisco, USA.
IBPL reported a profit after tax (PAT) of INR32.7 million on net
sales of INR217.8 million for 2012-13 (refers to financial year,
April 1 to March 31), against a PAT of INR9.0 million on net sales
of INR140.3 million for 2011-12.
K G CABLES: CRISIL Lowers Ratings on INR245MM Loans to 'D'
----------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of K G
Cables Pvt Ltd to 'CRISIL D/CRISIL D' from 'CRISIL
B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 50 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Letter of Credit 160 CRISIL D (Downgraded from
'CRISIL A4')
Term Loan 35 CRISIL D (Downgraded from
'CRISIL B+/Stable')
The rating downgrade reflects the over-utilisation by KGCPL of its
cash credit facility for more than 30 days consecutively. The
company has discontinued its manufacturing operations and is now
non-functional. Its management decided to cease manufacturing
operations due to unavailability of sufficient raw material
(copper) at feasible rates. This led to severe deterioration in
KGCPL's revenue generation capability and in its liquidity,
resulting in prolonged over-utilisation of its cash credit
facility.
KGCPL also had a small scale of operations, weak financial risk
profile, marked by a small net worth and weak debt protection
metrics, low profitability in highly competitive and fragmented
copper industry, and working-capital-intensive operations.
KGCPL was originally incorporated in April 2007 as Knitcraft
Creations Pvt Ltd. The name was changed to the present one in
April 2010. In 2010, KGCPL began setting up a unit to manufacture
copper products, such as bus bars, strips, profiles, and copper
cables. The unit started commercial operations from November 2011.
Its unit is in Alwar (Rajasthan).
KGCPL is promoted by Mr. Surinder Mittal and Mr. Rakesh Mittal
along with their sons, Mr. Kapil Mittal and Mr. Abhishek Mittal,
respectively. The promoters also operate other group entities in
similar lines of business, such as Veekay General Industries
(rated 'CRISIL B/Stable/CRISIL A4'), Hyvolt Electricals ('CRISIL
B+/Stable/CRISIL A4'), and Janta Wire Works. These group entities
mainly cater to the requirements of the Indian Railways.
M. K. STONE: CRISIL Assigns 'D' Ratings to INR74MM Loans
--------------------------------------------------------
CRISIL has assigned its 'CRISIL D' rating to the long-term bank
loan facilities of M. K. Stone. The rating reflects instances of
delay by MK in servicing its debt; the delays have been caused by
the firm's weak liquidity. MK has weak liquidity, marked by
insufficient net cash accruals vis-…-vis its debt obligations,
because of its nascent stage of operations.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 15.0 CRISIL D
Term Loan 59.0 CRISIL D
MK also has a below-average financial risk profile, marked by high
gearing and weak debt protection metrics, and a limited track
record. Moreover, it has a small scale of operations in the
intensely competitive building material sector. However, MK
benefits from its promoters' extensive experience in the building
material industry.
MK, set up in March 2011, manufactures aggregates (grit, metal,
and kapchi) which are used in the construction sector. The firm is
managed by its three partners: Mr. Mukesh Patel, Mr. Rajesh Patel,
and Mr. Jitendra Patel.
NANAK HI-TECH: CRISIL Lowers Ratings on INR147.4MM Loans to 'D'
---------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Nanak Hi-Tech Private Limited to 'CRISIL D' from 'CRISIL
B/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 70 CRISIL D (Downgraded from
'CRISIL B/Stable')
Term Loan 77.4 CRISIL D (Downgraded from
'CRISIL B/Stable')
The downgrade reflects instances of delay by NHT in servicing its
term loans; the delays have been caused by the company's weak
liquidity.
The rating also reflects NHT's limited track record of operations.
This ratings weakness is partially offset by promoter's experience
in the steel industry.
Nanak Hi-Tech Pvt Ltd was taken-over in 2008; by Jharkhand based
businessmen Mr. Gunwant Singh Saluja and his son Mr. Harindar
Singh Saluja. The company is engaged in manufacturing of mild
steel bars ranging from 8mm to 32 mm and the entire sales are made
in the local markets. NHT has its manufacturing facilities at
Giridh (Jharkhand).
R.B.CREATION: CRISIL Downgrades Ratings on INR40.5MM Loans to 'C'
-----------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank loan
facilities of R.B.Creation (part of the OHM group) to 'CRISIL C'
from 'CRISIL B-/Stable', and has reaffirmed its rating on the
firm's short-term facilities at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 0.5 CRISIL A4 (Reaffirmed)
Corporate Loan 20.5 CRISIL C (Downgraded from
'CRISIL B-/Stable')
Export Packing 7.5 CRISIL A4 (Reaffirmed)
Credit
Foreign Bill 37.5 CRISIL A4 (Reaffirmed)
Discounting
Standby Line of 3.3 CRISIL A4 (Reaffirmed)
Credit
Working Capital 20.0 CRISIL C(Downgraded from
Term Loan 'CRISIL B-/Stable')
The rating downgrade reflects significant pressure on the OHM
group's liquidity, because of its inadequate cash accruals vis-a-
vis term loan repayment obligations and fully utilised bank lines
on account of its large working capital requirements.
CRISIL's ratings on the bank facilities of R.B.Creation (part of
the OHM group) also reflect the OHM group's small scale of
operations; and below average financial risk profile, marked by an
aggressive capital structure, and weak debt protection measures.
The rating also factors in the group's exposure to risks related
to customer concentration in its revenue profile, volatility in
the value of the Indian rupee, and intense competition in the
readymade garments (RMG) segment. These rating weaknesses are
partially offset by the OHM group's established customer
relations, and the extensive industry experience of its promoters.
For arriving at its ratings, CRISIL has combined the business and
financial risk profiles of R.B. Creation and OHM Knit Faashion
(OHM). This is because both entities together referred to as the
OHM group, operate in same line of business, under the same
management team, and have financial and operational linkages.
R.B.Creation and OHM were established in 2003 in Tirupur (Tamil
Nadu). The entities are RMG manufacturers. The promoters of the
OHM group, Mr. K Ramalingam and Mr. M Krishnasamy, have more than
35 years of experience in the textile industry.
The OHM group reported a provisional net loss of INR58.3 million
on net sales of INR135.1 million for 2012-13 (refers to financial
year, April 1 to March 31), and a profit after tax of INR65
million on net sales of INR190.6 million for 2011-12.
ROSE PREMISES: CRISIL Downgrades Rating on INR200MM Loan to 'D'
--------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility of
Rose Premises Pvt Ltd to 'CRISIL D' from 'CRISIL B-/Stable'. The
downgrade reflects instances of delay by RPPL in servicing its
term debt; the delays have been caused by the company's weak
liquidity.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 200.0 CRISIL D (Downgraded from
'CRISIL B-/Stable')
RPPL also has a weak financial risk profile, marked by a small net
worth, a high gearing, and below-average debt protection metrics,
and is vulnerable to cyclicality in the hospitality industry and
to economic slowdown. However, RPPL continues to benefit from the
funding support that it receives from its promoters, and its
strategic location.
RPPL was incorporated in 2007 to construct service apartments in
Pune (Maharashtra). The commercial operations of its four-star
service apartment, Royal Orchid Golden Suites, started in June
2007. Currently, Mr. Vasudevan and Mr. Rajan H Khinvasara hold
equal stake in RPPL.
RPPL reported a net loss of INR32.9 million on net sales of
INR72.3 million for 2011-12 (refers to financial year, April 1 to
March 31), against a net loss of INR20.4 million on net sales of
INR86.6 million for 2010-11.
SARVESH SPINNERS: CRISIL Cuts Ratings on INR122MM Loans to 'B+'
---------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Sarvesh Spinners Pvt Ltd to 'CRISIL B+/Stable' from 'CRISIL BB-
/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 47.5 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Proposed Long-Term 15.5 CRISIL B+/Stable (Downgraded
Bank Loan Facility from 'CRISIL BB-/Stable')
Term Loan 59.0 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
The rating downgrade reflects the expected deterioration in SSPL's
liquidity, driven by inadequate cash accruals to meet repayment
obligations. SSPL is expected to report cash accruals of INR9
million to INR11 million in 2013-14 (refers to financial year,
April 1 to March 31) which will be insufficient to meet the
repayment obligations of INR15.9 million to INR20.0 million over
the same period. The repayment obligations have increased
substantially over the previous year because of the ballooning
structure of the repayments. CRISIL believes that SSPL's liquidity
will remain stretched owing to its increasing repayment
obligations over the medium term.
The rating reflects SSPL's small net worth and weak debt
protection metrics, its small scale of operations in the highly
fragmented cotton yarn industry, and its working-capital-intensive
operations. These rating weaknesses are partially offset by the
extensive experience of SSPL's promoter in the cotton yarn
industry.
Outlook: Stable
CRISIL believes that SSPL will continue to benefit over the medium
term from its promoter's extensive industry experience. The
outlook may be revised to 'Positive' if the company records
considerable increase in its revenues and profitability, resulting
in improvement in its cash accruals and hence, in its liquidity.
Conversely, the outlook may be revised to 'Negative' if there is a
significant decline in SSPL's revenues or profitability, or if its
working capital requirements are larger than expected, resulting
in a further stretch in its liquidity and consequently in
weakening of its financial risk profile.
SSPL was promoted by Mr. Rakesh Bansal in 2005 and began
commercial production in October 2007. The company manufactures
cotton yarn (between 6 and 22 counts) at its manufacturing
facility in Sangrur (Punjab). It also trades in acrylic yarn, dyed
yarn, polyester fibre, knitted cloth, and other fabrics.
SSPL is estimated to report a profit after tax (PAT) of INR1.79
million on net sales of INR230 million for 2012-13 (refers to
financial year, April 1 to March 31), as against a PAT of INR0.44
million on net sales of INR225 million for 2011-12.
SHAKTI SPINNERS: CRISIL Cuts Ratings on INR70MM Loans to 'D'
------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Shakti Spinners Ltd to 'CRISIL D' from 'CRISIL BB/Stable'. The
downgrade reflects instances of delay by SSL in servicing its term
debt; the delays have been caused by the company's weak liquidity.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 60 CRISIL D (Downgraded from
'CRISIL BB/Stable')
Term Loan 10 CRISIL D(Downgraded from
'CRISIL BB/Stable')
SSL also remains exposed to risks associated with the commodity
nature of its business. Moreover, the company is susceptible to
volatility in raw material prices, and has seasonal and working-
capital-intensive operations. However, SSL benefits from its
promoters' extensive industry experience.
SSL was set up in 1993 by Mr. Prince Sagar Jasuja and his family.
The company manufactures and supplies acrylic mink blankets and
artificial fur cloth both in the domestic and export markets. Its
manufacturing unit is in Ludhiana (Punjab).
SREE NIVAS: CRISIL Downgrades Rating on INR250MM Loan to 'D'
------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility of
Sree Nivas Buildtech (India) Pvt Ltd to 'CRISIL D' from 'CRISIL B-
/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 250.00 CRISIL D (Downgraded from
'CRISIL B-/Stable')
The rating downgrade reflects instances of delay by Sree Nivas
Buildtech in servicing its term debt; the delays have been caused
by the company's weak liquidity.
Sree Nivas Buildtech is also exposed to risks associated with the
implementation of its on-going project. Moreover, it has a small
scale of operations and is highly dependent on customer advances
for funding its on-going projects. However, the company benefits
from its established position in the real estate segment in
Puducherry, and its moderate gearing.
Sree Nivas Buildtech was set up in 2000 by Mr. R Venugopal. It
undertakes residential real estate projects. The company has
executed around eight real estate projects in Puducherry over the
past decade. Sree Nivas Buildtech is currently undertaking a
residential-cum-commercial real estate project at Ariyankuppam
(Puducherry). The project is expected to be completed by December
2014.
Sree Nivas Buildtech reported a profit after tax (PAT) of INR14.7
million on net sales of INR150.5 million for 2011-12 (refers to
financial year, April 1 to March 31); the company reported a PAT
of INR34.9 million on net sales of INR262.6 million for 2010-11.
S.S. CONSTRUCTION: CRISIL Cuts Rating on INR48MM Loan to 'B-'
--------------------------------------------------------------
CRISIL has downgraded its ratings on the long-term bank facilities
of S.S. Construction to 'CRISIL B-/Negative' from 'CRISIL
B/Stable' and re-affirmed the short-term ratings at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 48 CRISIL B-/Negative (Downgraded
from 'CRISIL B/Stable')
Proposed Bank 50 CRISIL A4 (Reaffirmed)
Guarantee
The rating downgrade reflects deterioration in SSC's business risk
profile on account of negligible orders at hand to be executed
over the medium term. CRISIL believes that the firm may not be
able to contract fresh orders over the medium term which would
further worsen its liquidity. The firm has weak liquidity marked
by high bank limit utilisation and negligible cash accruals.
The ratings continue to reflect SSC's weak financial risk profile,
marked by a small net worth, a high gearing, and weak debt
protection metrics, and small scale of operations, high
geographical concentration, and large working capital
requirements. These rating weaknesses are partially offset by the
extensive experience of SSC's promoter in the civil construction
industry.
For arriving at the ratings, CRISIL has treated unsecured loans of
INR14.2 million as on March 31, 2012, extended to SSC by its
promoter, as neither debt nor equity, as these loans are infused
for the long-term and are non-interest-bearing in nature.
Outlook: Negative
CRISIL believes that SSC's business risk profile will remain under
pressure over the medium term because of negligible orders at hand
to be executed over the same period. The ratings may be downgraded
if SSC registers more-than-expected deterioration in its business
risk profile, adversely affecting its liquidity and hence its
ability to service its debt in a timely manner. Conversely, the
outlook may be revised to 'Stable' if SSC contracts new orders for
execution and completes these without any time or cost overrun, or
if there is significant improvement in its capital structure
because of capital infusion by its promoter.
SSC was set up as a proprietorship firm by Mr. Ravinder Kumar in
2007. The firm primarily installs street lighting systems on
national highways and roads and to some extent undertakes
construction activities in Uttar Pradesh (UP). Before setting up
SSC, the promoter operated a partnership firm, also named SSC,
which was involved in diversified construction activities such as
construction of roads, buildings, and canals in UP. The group does
not undertake any electrification work. Therefore, the promoter
set up the proprietorship firm to install street lighting systems
on national highways and roads. Most of SSC's projects are
subcontracted to other contractors.
TECHNOMAX BUILDING: CRISIL Cuts Ratings on INR152.8M Loans to 'D'
-----------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
Technomax Building Solution India Pvt Ltd to 'CRISIL D/CRISIL D'
from 'CRISIL C/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 1.0 CRISIL D (Downgraded from
'CRISIL A4')
Cash Credit 81.0 CRISIL D (Downgraded from
'CRISIL C')
Letter of Credit 10.0 CRISIL D(Downgraded from
'CRISIL A4')
Long-Term Loan 60.8 CRISIL D (Downgraded from
'CRISIL C')
The rating downgrade reflects instances of delay by TBS in
servicing its debt over the six months through July 2013; the
delays have been caused by the company's weak liquidity. TBS has
weak liquidity on account of its working-capital-intensive
operations.
TBS also has a below-average financial risk profile, marked by a
highly leveraged capital structure, and a small scale of
operations in the intensely competitive ready mix concrete (RMC)
industry. However, TBS benefits from its promoters' experience in
the RMC segment.
TBS, incorporated in June 2008, manufactures RMC, which is used
predominantly in the construction industry. The company is
promoted by Mr. Rangaswami Raju who also manages its day-to-day
operations.
ZODIAC INFRASTRUCTURES: CRISIL Rates INR66MM Cash Credit at 'B-'
----------------------------------------------------------------
CRISIL has assigned its 'CRISIL B-/Stable' rating to the cash
credit facility of Zodiac Infrastructures Pvt Ltd. The rating
reflects ZIPL's exposure to risks inherent in the iron ore trading
industry, geographical and customer concentration, and below-
average financial risk profile. These rating weaknesses are
partially offset by the industry experience of ZIPL's promoters in
iron ore trading.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 66 CRISIL B-/Stable
Outlook: Stable
CRISIL believes that ZIPL will continue to benefit over the medium
term from its promoters' experience in the iron ore trading. The
outlook may be revised to 'Positive' in case the company registers
higher-than-expected increase in its revenues and profitability or
in case of more-than-expected integration of its operations.
Conversely, the outlook may be revised to 'Negative' in case ZIPL
registers lower-than-expected revenues and profitability, or if it
undertakes any larger-than-expected debt-funded capital
expenditure programme, resulting in weakening of its financial
risk profile.
ZIPL, set up in 2005 as a partnership firm, was reconstituted as a
private limited company in 2008. It trades in iron ore fines. The
company also operates a jewellery store in Bhubaneswar and deals
in gold and diamond-studded jewellery manufactured by Gitanjali
Gems Ltd. ZIPL is promoted by Mr. Miza Riaz Beg and his family.
=================
I N D O N E S I A
=================
APEXINDO PRATAMA: Moody's Assigns (P)Ba3 CFR; Outlook Stable
------------------------------------------------------------
Moody's Investors Service assigned a first-time provisional (P)Ba3
corporate family rating to PT Apexindo Pratama Duta Tbk.
The CFR is provisional on successful completion of the proposed
refinancing.
At the same time, Moody's has also assigned a provisional (P)Ba3
rating to the proposed USD-denominated secured bonds to be issued
by Apexindo Netherlands B.V., a wholly-owned subsidiary of
Apexindo. The proposed bonds are irrevocably and unconditionally
guaranteed by Apexindo and some of its subsidiaries.
The provisional rating is subject to Moody's review of the final
documentation of the bond offering circular.
The outlook on the ratings is stable.
Ratings Rationale:
"The Ba3 corporate family rating reflects the company's backlog of
contracted revenues of $762 million, equivalent to over 3.6x its
FY 2012 revenues; its relatively small but stable fleet profile
with no new vessels on order; and its competitive market position
in the Indonesian contract drilling industry, which benefits from
regulations that require oil and gas companies to use a proportion
of local content in their exploration and development activity,"
says Vikas Halan, a Moody's Vice President and Senior Analyst.
The ratings, however, are constrained by the company's
concentrated exposure to a single but high quality counterparty --
Total SA -- which accounts for 77% of its backlog of contracted
revenues.
"Further rating constraints include the company's geographical
concentration in Indonesia, its exposure to the highly cyclical
oil and gas exploration and development industry, and its fairly
high financial leverage," adds Halan, who is also the lead analyst
for Apexindo.
For 2012, Apexindo's leverage was relatively high for its ratings
with operating lease Adjusted debt/EBITDA of 4.3x , adjusted
debt/capitalization of 67.4% and EBIT/Interest of 1.9x.
For the last twelve months (LTM) ended in June 2013, Apexindo
reported revenue of $237million as compared to $209 million for
2012. The operating lease adjusted EBITDA for LTM June 2013 also
increased to $133 million as compared to $120 million for 2012.
The performance in the six months ended in June 2013 was in line
with the company's performance in the previous six months ended
December 2012 but better than the first six months of 2012.
Credit metrics in 2013 will stay at levels similar to 2012 as
three of the company's offshore vessels are due for blow-out-
preventer (BOP) certification and dry docking, which will reduce
their utilization levels and consequently EBITDA will only
marginally improve in 2013, despite increase in day rates on
recently renewed contracts, as compared to 2012.
Moody's expects credit metrics to improve from 2014 onwards as
vessel utilization improves and higher day rates take full effect,
such that adjusted debt/EBITDA will decline below 4.0x and
EBIT/Interest will increase to 2.5x.
The company faces significant contract renewal risk in 2015 and
early 2016 when the current contracts on 5 of its 13 vessels end.
But Moody's notes that it has a history of successfully renewing
its contracts and has maintained an average 90% utilization for
its offshore vessels over the last 5 years.
In 2009, Apexindo's holding company, PT Mitra International
Resources Tbk, also had a history of debt restructuring. Since
then, the holding company, which has no other assets, was acquired
by PT Aserra Capital.
The provisional CFR and rating of the bond are based on Moody's
expectation that the refinancing exercise will repay the bank
facility and the remaining proceeds will be used for general
corporate purposes, including the repurchase or repayment of the
IDR bonds on or prior to their maturity.
The outlook on the rating is stable, reflecting Moody's
expectation that the company will refrain from making any debt-
funded acquisitions, continue to perform on all its contracts,
maintain high utilization levels, and will be able to successfully
renew its contracts with high quality counterparties.
The rating would come under pressure if 1) the utilization of the
company's vessels drops due to operational challenges, or due to
its inability to renew its contracts when they expire, or 2) if
the company changes its policy and embarks on a debt-funded fleet
expansion programme. Credit metrics that Moody's will consider as
indicative of downward pressure on the ratings include adjusted
debt/ EBITDA staying above 4.0x and EBIT/ Interest failing to
improve to 2.5x, by FY2014.
A rating upgrade in the near to medium term is unlikely.
Nonetheless, upward pressure on the rating can develop over time,
if the company: 1) successfully renews its contracts at more
attractive rates, 2) increases its equity base and uses the
proceeds to expand its fleet, or 3) increases its revenues and
EBITDA such that its credit metrics improve. Credit metrics that
may lead to an upgrade of the rating include Adjusted debt/EBITDA
below 3.0x and EBIT/Interest exceeding 3.5x, on a sustained basis.
The principal methodology used in these ratings was the Global
Oilfield Services Rating Methodology published in December 2009.
PT Apexindo Pratama Duta Tbk, is Indonesia's leading provider and
operator of rigs for the oil, gas, coal-bed methane and geothermal
drilling industries. It has been in business since 1984 and
operates a fleet of 8 onshore rigs, 6 offshore rigs and 1 floating
production storage and offloading (FPSO) vessel.
Listed on the Jakarta Stock Exchange, Apexindo is 87.3% owned by
Apexindo International Pte. Limited (unrated), which in turn is
96.1% owned by PT Apexindo Energi Investama (unrated), a 100%
subsidiary of PT Aserra Capital (unrated).
=========
J A P A N
=========
JAPAN: Success of Abenomics is Crucial for Mega-Bank Performance
-----------------------------------------------------------------
Growing optimism over Japan's macroeconomic prospects does not
automatically result in an immediate improvement in the
performance or risk profiles of Japan's three mega banks --
Mitsubishi UFJ, Sumitomo Mitsui and Mizuho -- says Fitch Ratings.
The economy is showing early signs of a turnaround. However, a
sustained pick-up in domestic lending activity is still some way
off, in light of Japan's unfolding structural economic reforms.
One reason to expect subdued loan demand for the foreseeable
future is the excess liquidity at Japanese corporations. This is
reflected in the net cash position of the corporate sector, which
was at a five-year high at JPY62tn (or 13% of GDP) at end-June.
Nearly one-half of this was funded by internal capital generation.
"Another reason for our current scepticism is that we do not
expect much of an increase in household lending. This is because
it is difficult to foresee a strong or sustained rebound in
household loan demand until Japan's structural reforms
successfully increase inflation expectations, along with
commensurate or larger increases in labour income," Fitch says.
Meanwhile, low onshore interest rates are likely to persist. This,
alongside a sluggish pace of loan growth, will limit much
improvement in the margins of the mega banks' core domestic
operations.
The mega-banks have reduced their investments in Japanese
Government Bonds (JGBs) to about 3x of their Tier 1 capital at
end-June from 4x at end-March. This resulted from JGB buybacks by
the Bank of Japan (BOJ) as part of its continuing efforts to
double the monetary base by 2014. The banks' excess cash, from the
proceeds of JGB sales, has been re-parked at the BOJ's current
account - whose balance has risen sharply to JPY35tn or 7.3% of
GDP at end-June, up from 2.5% a year ago.
It remains to be seen if these excess funds will eventually be
lent onshore, or be used for funding greater cross-border
activity.
The mega-banks' JGB investments remain substantial despite the
recent reduction. These are unlikely to fall much further amid the
absence of stronger near-term onshore loan demand. But risks
arising from large JGB holdings should remain contained by the
banks' tight duration management, matched with ongoing improvement
in capital buffers.
Favourable stock market conditions, reflecting investors'
expectations for future economic recovery, could indeed boost the
mega-banks' mark-to-market gains. But this is unlikely to speed up
further reduction in their stock investments and ease related
market risk. The mega banks have already lowered their equity
exposure to around 25%-30% of Tier 1 capital, from over 100% a few
years ago. The remaining exposure is important for maintaining
business relations with issuers, and will prove difficult to sell
down.
====================
N E W Z E A L A N D
====================
WILLESTON LTD: Office Block Put Up For Sale
-------------------------------------------
Stuff.co.nz reports that a central Wellington office block which
financially troubled property investor Tony Molenaar has had on
the market for three years is now being put up for sale by company
liquidators.
PricewaterhouseCoopers liquidators John Fisk and Jeremy Morley
have commissioned Colliers International to sell the 11-storey
EMC2 building at 5-7 Willeston St., Stuff.co.nz relates.
It was owned by Willeston Ltd, one of 12 Molenaar-controlled
companies put into liquidation by the High Court in July, the
report says.
According to the report, the block, which had a 2012 rating value
of NZ$8,010,000, failed to sell when it was put on the market
earlier this year for about NZ$8 million.
At the time it was reported to be returning a net annual income of
NZ$770,000, but Colliers now reports it is returning NZ$570,000 a
year, Stuff.co.nz says.
The report relates that Colliers managing director Richard
Findlay, who is handling the tender process with Bill Leckie and
Michelle Spiers, said the market had been "keenly awaiting" this
sale.
Tenders close on October 4, Stuff.co.nz reports.
=====================
P H I L I P P I N E S
=====================
RURAL BANK OF STO. TOMAS: Placed Under PDIC Receivership
--------------------------------------------------------
The Monetary Board (MB) placed the Rural Bank of Sto. Tomas (Davao
del Norte), Inc. under the receivership of the Philippine Deposit
Insurance Corporation (PDIC) by virtue of MB Resolution No. 1469
dated Sept. 13, 2013. As Receiver, PDIC took over the bank on
Sept. 16, 2013.
Rural Bank of Sto. Tomas is a three-unit bank with Head Office
located along R. Magsaysay Ave., Sto. Tomas, Davao del Norte. Its
two branches are in Asuncion and Braulio Dujali, both in Davao del
Norte. Latest available records show that as of June 30, 2013,
Rural Bank of Sto. Tomas had 8,023 accounts with total deposit
liabilities of PHP67.7 million. A total of 8,011 deposit accounts
or 99.9% of the accounts have balances of PHP500,000 or less and
fully covered by deposit insurance. Total insured deposits
amounted to PHP58.2 million or 86.0% of the total deposits.
PDIC said that upon takeover, all bank records shall be gathered,
verified and validated. The state deposit insurer assured
depositors that all valid deposits shall be paid up to the maximum
deposit insurance coverage of PHP500,000.00.
The PDIC also announced that it will conduct a Depositors-
Borrowers Forum on Sept. 20, 2013, to inform depositors of the
requirements and procedures for filing deposit insurance claims.
Claim forms will be distributed during the Forum. The schedule and
venue of the Forum will be posted in the bank premises and in the
PDIC website, www.pdic.gov.ph. The claim forms and the
requirements and procedures for filing are likewise available for
downloading from the PDIC website.
Depositors may update their addresses with the PDIC
representatives at the bank premises or during the Forum using the
Mailing Address Update Forms to be furnished by PDIC
representatives. Duly accomplished Mailing Address Update Forms
should be submitted to PDIC representatives accompanied by a
photo-bearing ID with signature of the depositor. Depositors may
update their addresses until Sept. 23, 2013.
Depositors with valid deposit accounts with balances of
PHP15,000.00 and below need not file deposit insurance claims. But
depositors who have outstanding obligations with the Rural Bank of
Sto. Tomas including co-makers of the obligations, and have
incomplete and/or have not updated their addresses with the bank,
regardless of amount, should file deposit insurance claims.
For depositors that need not file deposit insurance claims, PDIC
targets to start mailing payments to these depositors at their
addresses recorded in the bank by the last week of September.
For depositors that are required to file deposit insurance claims,
the PDIC targets to start claims settlement operations for these
accounts by the second week of October. The schedule of the claims
settlement operations will be announced through notices to be
posted in the bank premises and other public places as well as
through the PDIC website, www.pdic.gov.ph.
According to the latest Bank Information Sheet (BIS) as of
June 30, 2013 filed by the Rural Bank of Sto. Tomas with the PDIC,
the bank is majority-owned by the Estate of Mariano S. Solis, Sr.
(22.6%), Rosele R. Solis (17.9%), Oscar L. Lacuesta (7.8%), Ma.
Lourdes S. Pineda (6.7%), Debin Uraya (4.1%), Abundio T. Merced
(3.9%) and Marsman Estate Plantation (3.8%). Its President and
Chairman is Rosele R. Solis.
* PHILIPPINES: Only 20 Preneed Firms Remain Out of 200
------------------------------------------------------
Michelle V. Remo at the Philippine Daily Inquirer reports that
before the Asian financial crisis of the late 1990s, there were
more than 200 preneed firms operating in the country. Now, there
are only 20 licensed preneed companies based on latest data from
the Insurance Commission's Web site.
The Inquirer says immediately after the Asian financial crisis,
preneed firms started collapsing. The problem peaked in mid-2000s
when big industry players, including College Assurance Plan (CAP)
and Pacific Plans Inc., could no longer service their obligations
to plan holders, the report relates.
According to the Inquirer, Gerard Lukban, commission secretary at
the Securities and Exchange Commission (SEC), said the financial
product was created in the Philippines because of the importance
that Filipinos gave to education.
The Inquirer relates that Mr. Lukban said the problem with preneed
firms was that it had no international model to follow. So, there
were no operational and regulatory benchmarks that could help
guide the preneed sector, the report says.
He said the business model involving "open-ended" education plans
proved to be disastrous for the industry, the Inquirer relays. An
open-ended preneed policy is one that promises to fully cover the
cost of tuition whatever the amount may be, the report discloses.
With the enactment of the law deregulating the education sector in
1992, preneed firms were confronted with increases in tuition that
exceeded their projections, according to the Inquirer.
The Inquirer notes that Prudentialife Plans Inc. (PPI) is the
latest of the many preneed companies that have failed. Like
other preneed firms, PPI sold open-ended education plans.
According to the report, Mr. Lukban said the Asian financial
crisis also caused serious problems in the industry. Many preneed
firms, given their heavy investments in real estate, suffered
losses due to drastic declines in property prices, says the
Inquirer.
"Many smaller industry players had failed following the Asian
crisis, but the problem of the industry got media attention only
when bigger players collapsed in the mid-2000s," the report quotes
Mr. Lukban as saying.
In the case of PPI, he said, the company started showing signs of
financial difficulties a few years before 2010, the Inquirer
relates.
It was in 2010 when regulation of the preneed industry was
transferred from the SEC to the Insurance Commission (IC), the
Inquirer notes.
====================
S O U T H K O R E A
====================
* Restaurant Boom Bodes Ill for Korea Economy, WSJ Reports
----------------------------------------------------------
Alex Frangos and Kwanwoo Jun at The Wall Street Journal report
that Korean fried chicken -- crunchy, tasty and usually served
with pitchers of cold beer -- has become a culinary phenomenon far
beyond the country's shores. But at home, it is a source of worry
for the struggling economy.
The Journal relates that in neighborhood after neighborhood, South
Korean cities are crowded with greasy fried chicken joints started
by families who used their homes as collateral for loans. Chicken-
fueled credit is part of a broader swelling of the nation's
household debt to levels approaching those in the U.S. before the
housing bust, the Journal says.
"If anyone would start doing this business, I would stop him by
all means," Kang Hyo-seon, who at 51 years old speeds around Seoul
on a motorcycle delivering boxes of fried chicken, the Journal
relates.
His family's cubbyhole-size restaurant was the second in his
neighborhood when it opened eight years ago. Now there are four.
"Things got worse as people began cramming into the market," the
report quotes Mr. Kang as saying.
According to the Journal, the Korean government is trying to slow
the growth of chicken restaurants -- which tripled to 36,000 over
the past 10 years -- amid concern about the rising household debt
burden, which is seen as a drag on economic growth.
While it is unlikely a burst fried chicken bubble alone would take
down Korea's financial system, a sharp rise in defaults would damp
consumer spending and make banks reluctant to lend, the Journal
notes.
Gross domestic product grew just 2% last year, its slowest rate
since the 2009 financial crisis, partly as a result of poor
domestic demand on top of weaker demand for Korean exports, says
WSJ.
===============
X X X X X X X X
===============
* Upcoming Meetings, Conferences and Seminars
---------------------------------------------
Nov. 1, 2013
AMERICAN BANKRUPTCY INSTITUTE
NCBJ/ABI Educational Program
Atlanta Marriott Marquis, Atlanta, Ga.
Contact: 1-703-739-0800; http://www.abiworld.org/
Dec. 2, 2013
BEARD GROUP, INC.
19th Annual Distressed Investing Conference
The Helmsley Park Lane Hotel, New York, N.Y.
Contact: 240-629-3300 or http://bankrupt.com/
Dec. 5-7, 2013
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Terranea Resort, Rancho Palos Verdes, Calif.
Contact: 1-703-739-0800; http://www.abiworld.org/
*********
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., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
Elaine T. Fernandez, Julie Anne L. Toledo, Frauline S. Abangan,
and Peter A. Chapman, Editors.
Copyright 2013. 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$775 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 215-945-7000 or Nina Novak at 202-241-8200.
*** End of Transmission ***