Thai Rating and Information Services Co., Ltd. (TRIS) announced that it has assigned a "AA-" rating to the proposed up to Bt3,600 million guaranteed debentures of Thainox Steel Ltd. (Thainox). These debentures are guaranteed by Thainox's parent company, USINOR, a company rated "Baa2" and "BBB" by Moody's and Standard & Poor's respectively. The rating reflects the unconditional and irrevocable guarantee of the debentures and the enforceability of these guaranteed debentures is legally binding. The funds raised from this issue will be used to refinance a part of a loan from USINOR, therefore, it will not increase Thainox's gearing ratio. The Bt3,600 million debentures represent merely 2% of USINOR's equity and will not alter USINOR's present long-term debt to equity ratio of 0.47.
TRIS reported that under the guarantee agreement, the guarantor irrevocably and unconditionally guarantees to make full payments of principal or interest of any debentures that Thainox does not pay, when a notification is made by the debentureholders' representative. The guarantee will be reinstated if any payment made by Thainox is voided, and returned as the property of Thainox, by the court on the ground that such payment gives undue preference to the debentureholders. Because the guarantee is governed by the laws of the French Republic, if guarantor fails to pay the amount due after receiving notice, the debentureholders' representative can commence a legal action in the commercial court in Paris against the guarantor for the defaulted amount. It is not necessary for the debentureholders' representative first to take any action against Thainox. The obligations of the guarantor under this guarantee agreement rank equally with other unsecured and unsubordinated debts of the guarantor.
TRIS said that USINOR's rating is supported by its position as the largest steel manufacturer in Europe and one of the two largest in the world in terms of revenues and the second largest producer of stainless steel in the world, and its competitive costs due to a continuous cost reduction program. These strengths are partially offset by cyclical nature of steel industry. The company has its head office in Paris and reported sales of 15,733 million euros in 2000. USINOR directly owns 93% of Thainox and Thainox is the only stainless steel production base for the USINOR Group in the Far East.
In March 2001, USINOR announced that it had entered into a MOU with the steel groups Arbed (an integrated steel company based in Luxembourg) and Aceralia (a large steel producer from Spain) to form a new company through exchange of shares. With this merger, USINOR/Arbed/Aceralia would become the world's largest steel company in terms of capacity. This transaction is subject to approval of the relevant anti-trust authorities. USINOR had a total debt (including short term debt) to capitalization ratio of 39% as of 2000. It had cash and cash equivalents of 582 million euros as of 2000. Net debt to capitalization was 33% at the end of 2000. For the first six months of 2001, USINOR reported sales of 7.8 billion euros and operating income after depreciation of 198 million euros. Its operating margin for the first half of 2001 declined to 2.5% from 8.9% in the same period in 2000.
TRIS said that though Thainox represents only 1% of USINOR's sales and only 1% of USINOR's worldwide steel production capacity, as USINOR's sole stainless steel manufacturer in Asia, it has significant importance in USINOR's strategy to be a global player. In addition, USINOR has shown strong commitment to Thainox through continuous capital injections into Thainox amounting to US$218 million from 1993 to 2001. TRIS is convinced that there is a strong link between USINOR and Thainox, and believes that Thainox will continue to receive full support from USINOR for the foreseeable future.
Thainox Steel Ltd. (Thainox) Issue Rating Up to Bt3,600 million guaranteed debentures due 2004 AA-
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TRIS reported that under the guarantee agreement, the guarantor irrevocably and unconditionally guarantees to make full payments of principal or interest of any debentures that Thainox does not pay, when a notification is made by the debentureholders' representative. The guarantee will be reinstated if any payment made by Thainox is voided, and returned as the property of Thainox, by the court on the ground that such payment gives undue preference to the debentureholders. Because the guarantee is governed by the laws of the French Republic, if guarantor fails to pay the amount due after receiving notice, the debentureholders' representative can commence a legal action in the commercial court in Paris against the guarantor for the defaulted amount. It is not necessary for the debentureholders' representative first to take any action against Thainox. The obligations of the guarantor under this guarantee agreement rank equally with other unsecured and unsubordinated debts of the guarantor.
TRIS said that USINOR's rating is supported by its position as the largest steel manufacturer in Europe and one of the two largest in the world in terms of revenues and the second largest producer of stainless steel in the world, and its competitive costs due to a continuous cost reduction program. These strengths are partially offset by cyclical nature of steel industry. The company has its head office in Paris and reported sales of 15,733 million euros in 2000. USINOR directly owns 93% of Thainox and Thainox is the only stainless steel production base for the USINOR Group in the Far East.
In March 2001, USINOR announced that it had entered into a MOU with the steel groups Arbed (an integrated steel company based in Luxembourg) and Aceralia (a large steel producer from Spain) to form a new company through exchange of shares. With this merger, USINOR/Arbed/Aceralia would become the world's largest steel company in terms of capacity. This transaction is subject to approval of the relevant anti-trust authorities. USINOR had a total debt (including short term debt) to capitalization ratio of 39% as of 2000. It had cash and cash equivalents of 582 million euros as of 2000. Net debt to capitalization was 33% at the end of 2000. For the first six months of 2001, USINOR reported sales of 7.8 billion euros and operating income after depreciation of 198 million euros. Its operating margin for the first half of 2001 declined to 2.5% from 8.9% in the same period in 2000.
TRIS said that though Thainox represents only 1% of USINOR's sales and only 1% of USINOR's worldwide steel production capacity, as USINOR's sole stainless steel manufacturer in Asia, it has significant importance in USINOR's strategy to be a global player. In addition, USINOR has shown strong commitment to Thainox through continuous capital injections into Thainox amounting to US$218 million from 1993 to 2001. TRIS is convinced that there is a strong link between USINOR and Thainox, and believes that Thainox will continue to receive full support from USINOR for the foreseeable future.
Thainox Steel Ltd. (Thainox) Issue Rating Up to Bt3,600 million guaranteed debentures due 2004 AA-
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