Bangkok--11 May--Moody's Investors Service
Approximately US$170 million of debt securities affected
Moody's Investors Service has downgraded the corporate family and senior unsecured ratings of G Steel Public Company ("G Steel") to Ca from Caa3. The outlook for the ratings is negative.
"The downgrade reflects Moody's concern regarding G Steel's very tight liquidity, weak asset coverage, and high probability of default," says Kathleen Lee, a Moody's Vice President.
"In the wake of the dramatic deterioration in G Steel's business operating environment, there has been a sharp decline in demand and prices for the company's processed steel products; this has caused a significant erosion of cash flow generation and very tight liquidity," says Lee, also Moody's lead analyst for the company.
"As a result, the company's ability to repay interest payments on outstanding bonds and the amortized loan repayment due 2009 is highly uncertain," she adds.
The downgrade to Ca therefore reflects the low expected recovery rate for bond holders.
The previous rating action with regard to G Steel was taken on March 6, 2009, when the company's corporate family and unsecured debt ratings were downgraded to Caa3 with a negative outlook.
The principal methodology used in rating G Steel was the Rating Methodology for Global Steel Industry, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory.
Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Credit Policy & Methodologies directory.
Headquartered in Bangkok, G Steel Public Company Limited ("G Steel") is Thailand's second largest hot rolled coil ("HRC") steel manufacturer and distributor.
Founded in 1995, G Steel's only started producing steel products in late 1999; the start-up thus straddled the worst period of the Asian crisis. G Steel completed a rehabilitation program in September 2003 and changed its name to G Steel Public Co Ltd in March 2004 from Siam Strip Mill Public Co Ltd. Restructured debt was subsequently pre-paid and an IPO completed in January 2006.
Singapore
Kathleen Lee
Vice President - Senior Analyst
Corporate Finance Group
Moody's Singapore Pte Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (65) 6398-8308
Singapore
Tony Tsai
Senior Vice President
Corporate Finance Group
Moody's Singapore Pte Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (65) 6398-8308