TRIS Rating Co., Ltd. has placed the issue ratings of Singer Thailand PLC (SINGER) on CreditAlert with a “developing” implication. The rating action follows the recent shareholder approval of two important resolutions. The shareholders gave their approval for SINGER to sell its financing business to its newly established, wholly-owned subsidiary, Singer Leasing (Thailand) Co., Ltd. (SLT). In addition, the shareholders gave approval for SINGER to sell all its hire purchase receivables to SLT by the end of 2012. SLT will finance the purchase of SINGER’s assets by borrowing from SINGER, which is its parent company. At the end of September 2012, SINGER’s net hire purchase receivables were Bt1,554 million, accounting for 62.2% of total assets.
Under the new group structure, SINGER will focus on its trading business. SLT will handle all the hire purchase receivables which are derived from the trading business of its parent company. Most of SINGER’s operating assets will be transferred to SLT, making SINGER a holding company of SLT. The transactions do not affect SINGER’s overall business and financial performance on a consolidated basis because the transactions are designed to enhance the efficiency of SINGER’s overall operation. However, the priority of claims arising from SINGER’s debts, including its debentures, will be subordinated to SLT’s debts once the transactions are completed. As a consequence, the issue ratings are likely to be downgraded because these business restructuring transactions cause a structural subordination of SINGER’s debts.
TRIS Rating expects to resolve the CreditAlert after SINGER has completed the transactions. An issue rating confirmation would be likely if SINGER and/or SLT could provide any relevant covenants that potentially mitigate the structural subordination. In contrast, a rating downgrade could occur if the transaction subordinates the priority ranking of claims for SINGER’s debentureholders. — End
Company Rating: BBB Outlook: Stable Issue Ratings: SINGER135A: Bt150 million senior debentures due 2013 BBB SINGER145A: Bt150 million senior debentures due 2014 BBB SINGER155A: Bt250 million senior debentures due 2015 BBB SINGER165A: Bt200 million senior debentures due 2016 BBB CREDITALERT DESIGNATION: Developing
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