TRIS Rating Co., Ltd. has affirmed the company rating of United Farmer & Industry Co., Ltd. (UFIC) at "BBB+". At the same time, TRIS Rating has assigned the ratings of "BBB+" to UFIC's four proposed senior secured debentures totaling Bt1,700 million. (UFIC#1, UFIC#2, UFIC#3, UFIC#4). As a sugar producer under the Mitr Phol group, UFIC's ratings reflect the Mitr Phol group's leading position in the Thai sugar industry, its above-average sugar mill operations, and its well-accepted brand name. Despite more than 60% of UFIC's revenue coming from export markets, its exposure to sugar commodity price risk is partly mitigated by the 70:30 revenue sharing system. However, these strengths are partially offset by the highly leveraged balance sheets of both the company and the group.
At the same time, TRIS Rating has affirmed the "stable" outlook to UFIC, which reflects TRIS Rating's expectation that UFIC and its parent, the Mitr Phol group, will continue to maintain their leading position in the Thai sugar industry. UFIC's profitability is expected to remain stable, as a result of the revenue sharing system in the Thai sugar and sugarcane industry.
TRIS Rating said, the proceeds of the proposed debentures will be used to refinance UFIC's existing long-term loans. The bondholders will have the right to claim on collateral pari passu to the bank lender. The collateral package includes land, buildings, and machinery of the sugar mills. The issuance of the debentures has already been considered and UFIC's capital structure remains in line with TRIS Rating's expectation. - End
United Farmer & Industry Co., Ltd. Company Rating: Affirmed at BBB+ Issue Ratings: UFIC#1: Bt200 million senior secured debentures due 2006 BBB+ UFIC#2: Bt500 million senior secured debentures due 2007 BBB+ UFIC#3: Bt500 million senior secured debentures due 2008 BBB+ UFIC#4: Bt500 million senior secured debentures due 2009 BBB+ Rating Outlook: Stable