Thai Rating and Information Services Co., Ltd. (TRIS) announced Tuesday 10 July 2001 that it has affirmed an "A-" company rating of LSPV Co., Ltd. (LSPV). The rating is based primarily on the probability of default and the potential recovery of the ultimate payment of interest and principal in the event of the company's insolvency. The rating affirmation reflects evaluation of credit risks associated with the impact of market and regulatory environments on the value and liquidity of the collateral, the ability of Sang Som group to perform its roles as offtaker and guarantor in this transaction, the sufficient level of credit enhancement of the collateral, reserve fund and shareholders' subordinated loans, as well as the sound legal structure of the transaction and comprehensive insurance policies.
TRIS reported that LSPV Co., Ltd. (LSPV) is a special-purpose company, in which Sang Som Co., Ltd. (Sang Som) owns 29% of registered capital and six subsidiaries of Sang Som own the rest. LSPV was established in 1998 to raise funds through secured loans and debentures for purchasing spirits produced under Sang Som group's exclusive concessions before liberalization of the spirit industry in 2000. For collateral, LSPV used 531.45 million litres of distilled spirits.
TRIS believes that the current situation - sufficient demand, no foreseeable significant increase in supply, and a low tax rate for the collateralised spirits - should make LSPV's collateralized spirits very marketable. TRIS sees little likelihood of the collateral falling below the value of LSPV's balance sheet. Moreover, Sang Som group still continues to dominate the spirit market through defensive strategies set in place before liberalization, namely: acquiring 12 government-owned distilleries, continuously building a massive inventory of bottled spirits, and replacing the government-owned brand with its own. In addition to defensive strategies, the group successfully initiated a growth strategy of rebuilding "Sang Som" brand recognition to enhance its market share of blended spirits above 40 degrees (sura piset). It is estimated that Sang Som holds "Sang Som" brand spirits sufficient for several years of sales without further production. Therefore, the group's strong position in the spirits market ensures that Sang Som has demonstrable ability to purchase the collateralized spirits.
TRIS also reported that LSPV has a sufficient level of credit enhancement in the form of 100% over-collateralization of the bottled spirits, three-month reserve fund for interest payments and operating expenses, and shareholders' subordinated loans. The transaction has sound legal structure comprising a true sale transaction, pledges of spirits assigned to the security agent and a monthly-installment basis of debt repayments. It also has comprehensive insurance policies covering all-risk insurance and fidelity guarantee insurance, TRIS said.
LSPV Co., Ltd. (LSPV) Company Rating Senior debt Affirmed at A-
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TRIS reported that LSPV Co., Ltd. (LSPV) is a special-purpose company, in which Sang Som Co., Ltd. (Sang Som) owns 29% of registered capital and six subsidiaries of Sang Som own the rest. LSPV was established in 1998 to raise funds through secured loans and debentures for purchasing spirits produced under Sang Som group's exclusive concessions before liberalization of the spirit industry in 2000. For collateral, LSPV used 531.45 million litres of distilled spirits.
TRIS believes that the current situation - sufficient demand, no foreseeable significant increase in supply, and a low tax rate for the collateralised spirits - should make LSPV's collateralized spirits very marketable. TRIS sees little likelihood of the collateral falling below the value of LSPV's balance sheet. Moreover, Sang Som group still continues to dominate the spirit market through defensive strategies set in place before liberalization, namely: acquiring 12 government-owned distilleries, continuously building a massive inventory of bottled spirits, and replacing the government-owned brand with its own. In addition to defensive strategies, the group successfully initiated a growth strategy of rebuilding "Sang Som" brand recognition to enhance its market share of blended spirits above 40 degrees (sura piset). It is estimated that Sang Som holds "Sang Som" brand spirits sufficient for several years of sales without further production. Therefore, the group's strong position in the spirits market ensures that Sang Som has demonstrable ability to purchase the collateralized spirits.
TRIS also reported that LSPV has a sufficient level of credit enhancement in the form of 100% over-collateralization of the bottled spirits, three-month reserve fund for interest payments and operating expenses, and shareholders' subordinated loans. The transaction has sound legal structure comprising a true sale transaction, pledges of spirits assigned to the security agent and a monthly-installment basis of debt repayments. It also has comprehensive insurance policies covering all-risk insurance and fidelity guarantee insurance, TRIS said.
LSPV Co., Ltd. (LSPV) Company Rating Senior debt Affirmed at A-
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