Bangkok--Jan 9--Moody's Asia Pacific
Moody's Investor Service has affirmed the B3 senior unsecured rating of Advance Agro Public Company Limited's (AA) US$250 million bonds due 2012 and removed the rating from its provisional status. At the same time, Moody's has affirmed the company's B3 corporate family rating and upgraded to B3 from Caa1 the rating for AA's US$48.7 million guaranteed unsecured notes due 2007. The outlook for the ratings is stable.
These rating actions follow the successful closing of AA's US$250 million bond issuance and subsequent repayment of the secured debt -- with Thai
banks -- under the Master Override Agreement (MOA). The Thai banks had also released the title of the collateral. This action alleviated legal subordination risk, and secured debt now represents around 5% of total debt.
Moody's says that upward ratings pressure would evolve if there is: 1) an improvement in AA's liquidity position; 2) the establishment of a track record that complies with its bond covenants; and 3) maintenance of its current financial profile, including the ability to generate free cash flow and maintain TD/EBITDA below 4.0x - 4.5x on a sustainable basis.
On the other hand, the ratings would come under downward pressure if
there is: 1) an acceleration of repayments from bondholders; 2) upstreaming of funds to support other group companies; or 3) a material downward trend in the paper market and an aggressive debt-funded capex plan, resulting in TD/EBITDA above 5.5x - 6.0x and EBITDA/Int below 1.5x.
Advance Agro (AA), headquartered in Bangkok, Thailand, is an integrated
producer of pulp, uncoated free sheet, and coated paper.
Hong Kong
Ken Chan
Analyst
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 2916-1121
Hong Kong
Gary Lau
Senior Vice President
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 2916-1121 End.