Bangkok--8 Jun--Moody's
Moody's Investors Service has today affirmed the B1 corporate family rating of True Move Company Limited ("True
Move"). At the same time, Moody's has upgraded the rating on the senior unsecured bond rating to B1. Moody's has also changed the outlook on these ratings to stable from negative.
The change in outlook reflects True Move's new committed bank facility with DBS bank which will refinance the bulk of its existing Thai bank facilities; certain of the financial covenants for these facilities have been temporarily waived. Moody's remains cognizant of the waivers still in place from all lenders and the fact that such waivers expire on 30th September, 2007, however it is understood that the company is making efforts to bring these covenants inline with the refinanced terms.
Moody's notes that refinanced loan is fully underwritten and that once drawndown, secured debt/total debt will be less than 15% and therefore, in accordance with Moody's notching guidelines, the senor unsecured bond rating will rank on par with the corporate family rating hence the upgrade in the bond rating.
Moody's considers the credit profile of True Move to be highly correlated with that of its parent True Corp, given its operational position within the group -- True Move contributes approximately 43% of consolidated revenues. At the same time, True Corp benefits from the diversity and increasing revenue contribution provided by True Move. True Move's total
debt represents approximately 35% of True Corp's group debt. Given the degree of inter-relation between various group entities and the movement of funds between them, Moody's views the 3 core group companies (True Corp, True Move and True Visions) as having the same risk profile.
Given the current credit profile of True Corp and True Move, ongoing regulatory uncertainties and the existence of various covenant waivers within the group it is unlikely that the rating will be upgraded in the next 12 to 18 months or until the company is able to demonstrate a sustainable ability to operate within its bank covenants, uncertainties surrounding its concession are resolved or stabilized and there are improvements in its credit metrics.
The most immediate likely drivers of negative rating action are: 1) True Move fails to obtain the necessary approval for the extension of the financial covenant breach under its bank facilities or fails to complete its proposed Bt7.9 billion refinancing exercise; and/or 2) True Corp fails to negotiate covenant waivers or amendment on 30th September, 2007
for its own bank facilities.
Further, True Move ratings could undergo downward pressure if (a) further regulatory actions impact the operating profile of the company or (b) it experiences greater competition and further liberalization -- so that its financial profile is not improving as evidenced for example by adjusted debt/EBITDA ratio increasing much beyond 5x.
Headquartered in Bangkok, True Move (formerly TA Orange) is Thailand's third largest mobile operator. It holds a concession until 2013 to operate a 1800-MHz cellular business from CAT Telecom Public Co. Ltd. (state-owned).
Its (93%) major shareholder, True Corp, is an integrated provider of fixed-line, broadband, internet, mobile services and pay TV (the latter via its recent acquisition of True Visions (formerly known as UBC).
True Move had a market share of 19.3% as of 31st December 2006 and generated revenues of Bt23.7 billion (US$722 million). True Corp is listed on the Thailand Stock Exchange and the Charoen Pokphand Group is the major shareholder with an approximate 30.4% shareholding.
Hong Kong
Laura Acres
Vice President - Senior Analyst
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 2916-1121
Singapore
Alan Greene
Senior Vice President
Corporate Finance Group
Moody's Singapore Pte Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (65) 6398-8308