Bangkok--28 Jun--Moody's Asia
Moody's Investors Service has today placed the B1 corporate family rating and senior unsecured bond rating of G Steel Public Company Limited on review for possible downgrade.
This rating action follows G Steel's announcement it will purchase approximately US$180 million in convertible bonds issued by Nakornthai Strip Mill PLC (NSM). The bond purchase will allow G-Steel - upon conversion - to acquire around 19% of NSM's shares within 6 months. The ratings agency further notes that G Steel may exercise its right to increase the proportion of debt it would convert into equity in the next 18 months if it deems such an exercise as worthwhile.
"Moody's is concerned that this majority debt-funded transaction could weaken G Steel's credit profile and raise refinancing risk, given an appropriate long-term funding arrangement has yet to be put in place," says lead analyst Angela Choi, adding, "NSM is also restructuring its debt and may issue further calls for capital support from its shareholders, including G Steel."
"In its review, Moody's will evaluate how the purchase of NSM's convertible bond will be funded and the subsequent impact on G Steel's financial profile. Moody's will also assess G Steel's financial policy and business strategy relative to NSM as well as its commitment to provide on-going support for NSM's operations," says Choi.G Steel Public Company Ltd, headquartered in Bangkok, produces hot rolled coils (HRC) in different grades and gauges. G Steel is a stand-alone
operating entity with no related group companies.
Hong Kong
Angela Choi
Analyst
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 2916-1121