Bangkok--Dec 6--Fitch Ratings
Fitch Ratings (Thailand) Limited has today assigned Final National Long-term ratings of ‘AA(tha)’ to three series of guaranteed bonds amounting to up to THB8 billion issued by Holcim Capital (Thailand) Limited (“the Issuer”) with Series I due 2008, Series II due 2010 and Series III due 2012. The Outlook on the ratings is Stable.
The National ratings reflect the irrevocable and unconditional guarantee provided by Swiss-based Holcim Ltd (“Holcim”, rated ‘BBB+’/Stable/‘F2’), of which the guarantee amount of up to THB8.8bn, is expected to fully cover the obligations under the guaranteed bonds. Holcim is rated two notches below Thailand’s Long-term International local currency rating of ‘A’ with a Stable Outlook. This, in turn, results in the National ratings of the guaranteed bonds being two notches below Thailand’s sovereign National rating of ‘AAA(tha)’. Any rating divergence between Holcim and Thailand may affect the issue’s National ratings. Investors should note that a one notch change in the International rating could result in change of greater than one notch in the National rating.
Holcim's ratings reflect its leading international market positions and diversified product portfolio. The company is one of the world’s largest cement manufacturers and also a world leader in aggregates and concrete, with sales of over CHF13bn and over 150 million tons of cement capacity at fiscal year-end 2004. These strong positions are supported by superior geographical diversification with a high penetration in Latin America, which offer higher EBITDA margins and more dynamic growth than mature markets, and increased presence in high growth countries of Central/Eastern Europe Asia and India. Such an extensive and unmatched global reach has been a key feature of the company’s well executed strategy of the past decades and has helped mitigate cyclicality in recent years. This is evidenced by the consistently strong operating performance and above sector average EBITDA margins over the past five years. Liquidity is strong, backed by substantial cash balances over the past three years of over CHF3bn and CHF2bn of unutilised committed credit facilities at fiscal year-end 2004. While the credit metrics of Holcim are expected to deteriorate for the full year 2005 as the company has raised debt to finance recent acquisitions, Fitch believes that the company's continued strong cash generation and more moderate acquisition spending will help the company restore a healthy financial profile within the next two years.
The Issuer is a privately-held company incorporated in Thailand in 1998. Its existing shareholders are Thai Roc-Cem Limited (holding 51%) and Holderfin B.V. Netherlands (holding 49%). Thai Roc-Cem Limited is 49% owned by Holcim Participations (Thailand) Limited, a 100%-owned subsidiary of Holderfin B.V., which in turn is wholly owned by Holcim — the guarantor. The main objective of setting up the Issuer is to raise funds and provide financial support to companies in the group. Since its inception, the Issuer has had limited business activities and has no recurring income. Its operating expenses have been funded by shareholders’ equity and borrowings from a related company.
The proceeds of the guaranteed bonds will be used to lend to the Issuer’s related companies, namely Thai Roc-Cem Limited and Holcim Participations (Thailand) Limited to repay their loans. These two companies act as investment arms of Holcim in Thailand. Incorporated in 1992, Thai Roc-Cem’s main investment is a 31% stake in Siam City Cement Plc — the second largest cement producer in Thailand while Holcim Participations (Thailand) Limited owns shares in Thai Roc-Cem Limited. The Issuer’s key revenue stream in the future will come from interests received and principal repayment from Thai Roc-Cem Limited and Holcim Participations (Thailand) Limited. The ratings of the bonds are entirely based on the guarantee mentioned above.
CONTACT: Orawan Karoonkornsakul, Vincent Milton; Bangkok, +662 655 4755
Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with sub- or low-investment grade international sovereign 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.
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