TRIS Rating Co., Ltd. has cancelled the company rating of Singer Thailand PLC (SINGER) due to the request of SINGER since the company does not have any plans to issue debentures in the near future. Therefore, TRIS Rating will no longer monitor SINGER's performance, and the previously-assigned “BBB/Positive” rating should not be used for a reference.
At the same time, TRIS Rating has upgraded the company rating of TPI Polene PLC (TPIPL) from “BBB-” to “BBB” with “stable” outlook. The upgrade reflects TPIPL’s strengthened capital structure after a large capital increase in August 2006. Almost all the proceeds were used to repay nearly half of TPIPL’s outstanding debt under the Master Restructuring Agreement (MRA). The rating also incorporates TPIPL’s strong position as the third largest cement producer and the leading low density polyethylene (LDPE) producer as well as the positive prospects for cement and LDPE demand in the intermediate term. However, these strengths are partially offset by intense competition in the domestic cement market and the cyclical nature of both the cement and petrochemical industries which cause the company’s operating performance to fluctuate.
The “stable” outlook reflects the expectation that the financial profile of TPIPL might show modest improvement due to a lingering intensely competitive operating environment. The outlook is also based on expectation that TPIPL will complete its refinancing no later than the first half of 2007. However, the rating might be reviewed for possible downgrade if there are any circumstances that negatively affect the company’s business operation. On a contrary, if TPIPL’s operating performance is significantly better than expectation and pending court cases are resolved and lower the debt level, its rating might be reviewed for possible upgrade.
TRIS Rating reported that TPIPL raised Bt12,175.6 million of new funds in August 2006 and used Bt11,500 million to repay debt. After the debt repayment, the company’s outstanding debt declined sharply from Bt32,122 million in 2005 to Bt16,840 million as of September 2006. TPIPL’s outstanding debt from financial institutions includes debts under the Debt Repurchase Program (DRP) of Bt5,480 million and debts under the MRA of Bt11,360 million. The DRP debt composed of principal of Bt3,949 million, accrued interest payable of Bt1,424 million and accrued default interest payable of Bt107 million of which Bt3,118 million has been deposited by TPIPL with the Central Bankruptcy Court as the settlement price for such debt buy back. However, if the DRP debts are excluded, the outstanding debt would decline to Bt11,360 million of which Bt10,787 million was principal, Bt5 million was accrued interest payable and Bt568 million was accrued default interest payable. TPIPL has fought with creditors against debt repurchases under the DRP since 2004. The Central Bankruptcy Court set a verdict in favour of TPIPL in 2005. The creditors filed a petition and the case is currently under consideration by the Supreme Court. If the company wins the case, it would be able to realize a gain totaling Bt2,362 million from the DRP. The gain includes gain from principal reduction of Bt831 million plus gain from a waiver of accrued interest and accrued default interest payable of Bt1,531 million.
TRIS Rating said, TPIPL entered into a debt restructuring program and signed the MRA with creditors in July 2000. According to the MRA, TPIPL must repay all outstanding debt in 2004, with an option to extend the final maturity date three times, with each extension lasting for 12 months. So far, the repayment date has been extended twice with the debt due in December 2006. The company is in the process of refinancing its existing debt and considering filing a petition with the Central Bankruptcy Court to exit from rehabilitation status. If TPIPL cannot close the refinancing package before the deadline, it will request the final extension, moving the maturity date to December 2007. TRIS Rating expects that TPIPL will conclude the debt refinancing package and emerge from rehabilitation within the first half of 2007. Upon refinancing, the company’s financial flexibility is expected to improve as debt servicing obligations will be structured to match with internal cash generation of the company.
In terms of operating performance, TRIS Rating views that pressure from sluggish demand for cement and resultant tough competition will continue. However, near-term demand is expected to increase from housing reconstruction and infrastructure repairs caused by flooding in the northern and central parts of the country. Cement price cuts in an effort to gain market share have given way to price rises in an effort to restore profitability. However, the price rises have not been sufficient to offset the increases in energy and fuel costs. For the plastics business, the operating results softened as spreads for both LDPE-ethylene and ethyl vinyl acetate (EVA)-ethylene narrowed. As a result, TPIPL’s operating margin in the first nine months of 2006 declined to 16.09%, compared with 17.78% in 2005. Nonetheless, funds from operations for the nine month period was Bt2,262 million, relatively unchanged from the same period of the previous year, as a result of lower interest expense from debt reduction and a realized gain from foreign exchange worth Bt630 million. Interest expense is expected to further decline since the company paid off Bt11,500 million in debt during August 2006. The net debt to capitalization ratio improved considerably from 46.04% in 2005 to 22.46% as of September 2006.
TRIS Rating also said that TPIPL’s capital structure is not expected to improve much in the near future. The company’s cash flow generation will be constrained by earnings pressures, planned capital expenditures (cement line 4 and an energy saving project), dividend payments, and corporate income tax payments which start in fiscal year 2006 after the tax benefits from loss carry forward are now fully utilized. -- End
1) Singer Thailand PLC (SINGER)
Company Rating: Cancelled
2) TPI Polene PLC (TPIPL)
Company Rating: Upgraded to “BBB” from “BBB-”
Rating Outlook: Stable
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Copyright 2006, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, th
At the same time, TRIS Rating has upgraded the company rating of TPI Polene PLC (TPIPL) from “BBB-” to “BBB” with “stable” outlook. The upgrade reflects TPIPL’s strengthened capital structure after a large capital increase in August 2006. Almost all the proceeds were used to repay nearly half of TPIPL’s outstanding debt under the Master Restructuring Agreement (MRA). The rating also incorporates TPIPL’s strong position as the third largest cement producer and the leading low density polyethylene (LDPE) producer as well as the positive prospects for cement and LDPE demand in the intermediate term. However, these strengths are partially offset by intense competition in the domestic cement market and the cyclical nature of both the cement and petrochemical industries which cause the company’s operating performance to fluctuate.
The “stable” outlook reflects the expectation that the financial profile of TPIPL might show modest improvement due to a lingering intensely competitive operating environment. The outlook is also based on expectation that TPIPL will complete its refinancing no later than the first half of 2007. However, the rating might be reviewed for possible downgrade if there are any circumstances that negatively affect the company’s business operation. On a contrary, if TPIPL’s operating performance is significantly better than expectation and pending court cases are resolved and lower the debt level, its rating might be reviewed for possible upgrade.
TRIS Rating reported that TPIPL raised Bt12,175.6 million of new funds in August 2006 and used Bt11,500 million to repay debt. After the debt repayment, the company’s outstanding debt declined sharply from Bt32,122 million in 2005 to Bt16,840 million as of September 2006. TPIPL’s outstanding debt from financial institutions includes debts under the Debt Repurchase Program (DRP) of Bt5,480 million and debts under the MRA of Bt11,360 million. The DRP debt composed of principal of Bt3,949 million, accrued interest payable of Bt1,424 million and accrued default interest payable of Bt107 million of which Bt3,118 million has been deposited by TPIPL with the Central Bankruptcy Court as the settlement price for such debt buy back. However, if the DRP debts are excluded, the outstanding debt would decline to Bt11,360 million of which Bt10,787 million was principal, Bt5 million was accrued interest payable and Bt568 million was accrued default interest payable. TPIPL has fought with creditors against debt repurchases under the DRP since 2004. The Central Bankruptcy Court set a verdict in favour of TPIPL in 2005. The creditors filed a petition and the case is currently under consideration by the Supreme Court. If the company wins the case, it would be able to realize a gain totaling Bt2,362 million from the DRP. The gain includes gain from principal reduction of Bt831 million plus gain from a waiver of accrued interest and accrued default interest payable of Bt1,531 million.
TRIS Rating said, TPIPL entered into a debt restructuring program and signed the MRA with creditors in July 2000. According to the MRA, TPIPL must repay all outstanding debt in 2004, with an option to extend the final maturity date three times, with each extension lasting for 12 months. So far, the repayment date has been extended twice with the debt due in December 2006. The company is in the process of refinancing its existing debt and considering filing a petition with the Central Bankruptcy Court to exit from rehabilitation status. If TPIPL cannot close the refinancing package before the deadline, it will request the final extension, moving the maturity date to December 2007. TRIS Rating expects that TPIPL will conclude the debt refinancing package and emerge from rehabilitation within the first half of 2007. Upon refinancing, the company’s financial flexibility is expected to improve as debt servicing obligations will be structured to match with internal cash generation of the company.
In terms of operating performance, TRIS Rating views that pressure from sluggish demand for cement and resultant tough competition will continue. However, near-term demand is expected to increase from housing reconstruction and infrastructure repairs caused by flooding in the northern and central parts of the country. Cement price cuts in an effort to gain market share have given way to price rises in an effort to restore profitability. However, the price rises have not been sufficient to offset the increases in energy and fuel costs. For the plastics business, the operating results softened as spreads for both LDPE-ethylene and ethyl vinyl acetate (EVA)-ethylene narrowed. As a result, TPIPL’s operating margin in the first nine months of 2006 declined to 16.09%, compared with 17.78% in 2005. Nonetheless, funds from operations for the nine month period was Bt2,262 million, relatively unchanged from the same period of the previous year, as a result of lower interest expense from debt reduction and a realized gain from foreign exchange worth Bt630 million. Interest expense is expected to further decline since the company paid off Bt11,500 million in debt during August 2006. The net debt to capitalization ratio improved considerably from 46.04% in 2005 to 22.46% as of September 2006.
TRIS Rating also said that TPIPL’s capital structure is not expected to improve much in the near future. The company’s cash flow generation will be constrained by earnings pressures, planned capital expenditures (cement line 4 and an energy saving project), dividend payments, and corporate income tax payments which start in fiscal year 2006 after the tax benefits from loss carry forward are now fully utilized. -- End
1) Singer Thailand PLC (SINGER)
Company Rating: Cancelled
2) TPI Polene PLC (TPIPL)
Company Rating: Upgraded to “BBB” from “BBB-”
Rating Outlook: Stable
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Copyright 2006, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, th