Bangkok--5 Sep--Moody's
Moody's Investors Service says it is continuing its review for possible downgrade of G Steel Public Company Limited's B1 corporate family and senior unsecured ratings.
The ratings were initially placed on review for possible downgrade on June 27 following G Steel's announcement that it would pay up to US$180 million to procure Nakornthai Strip Mill PLC's (NSM) convertible debt.
"In its continuing review, Moody's will evaluate how the purchase of NSM's convertible debt would be financed and the subsequent impact on G Steel's financial profile," says Angela Choi, lead analyst.
"If the transaction proceeds as planned, Moody's will likely lower G Steel's ratings by one notch to B2", Angela Choi, adds.
While Moody's acknowledges the strategic benefits of the proposed transaction, the lower rating reflects the company's plan to raise up to US$120 million in debt to part fund the transaction, thereby weakening its credit metrics to a level that is more consistent with a B2 rating.
The final rating outlook will likely depend on the terms associated with the debt being raised, including any potential refinancing risk if a short-term debt structure is employed.
"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," adds Choi.
"However, should the transaction not occur, the company's ratings are likely to be confirmed." adds Choi.
G Steel Public Company Ltd, headquartered in Bangkok, produces hot rolled coils (HRC) in different grades and gauges. G Steel is an 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
Hong Kong
Gary Lau
Senior Vice President
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 2916-1121