Bangkok--Sep 16--Fitch Ratings (Thailand)
Fitch Ratings (Thailand) Limited has today placed the two tranches of Sahaviriya Steel Industries Public Company Limited’s (“SSI”) secured amortising debentures due March 2007 and March 2008, currently rated National Long-term ‘BBB(tha)’, on Rating Watch Negative.
Fitch’s decision to place the ratings of SSI’s secured debentures on Negative Watch follows an announcement by Sahaviriya Group Company Limited — which owns a 24.9% stake in SSI - to invest in a USD11.3 billion (or approximately THB470bn) iron-smelting complex. Though at this stage the upstream project is likely to be carried out by the Sahaviriya Group, SSI has indicated it may consider co-investing in the project. Depending on the size of the investment and the level of the debt financing, this could impact SSI’s debt profile in the medium term. Before a decision to invest is made, SSI will conduct a feasibility study on the structure of the potential investment in this project which is expected to take a few months. The Watch status will be resolved once details on SSI’s investment decision as well as the funding structure are finalised.
The project will be Thailand’s first upstream steel mill with planned capacity of 30 million tons/year of slab. The project will comprise five phases over a 15-year period, to be completed in 2019. The initial phase of 4.5m tons/year capacity is expected to start in mid-2005 and is scheduled to be completed in 2007, with an investment cost of USD1.7bn (c. THB70bn). SSI, which is a non-integrated producer of hot rolled steel in coils (“HRC”), is likely to be the main slab off-taker of the initial-phase project as the company currently imports all of the slab used in its HRC production. After the completion of its new HRC capacity, SSI would require about 4 million tons of slab for its production. The upstream project should help lower SSI’s slab inventory requirements and increase the stability of its slab procurement in the long run.
A full rating report on Sahaviriya Steel Industries Plc. is available on the agency’s subscriber website at www.fitchratings.com
Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable.
Contact: Wasant Polcharoen, Bangkok, Tel: +662 655 4763, Orawan Karoonkornsakul, +662 655 4766, Vincent Milton, +662 655 4759. End.
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