TRIS Rating Co., Ltd. has downgraded the company rating of TSFC Securities Ltd. (TSFC) to “C” from “BB-” and has maintained the “CreditAlert” with “negative” implication.
TRIS Rating said that the downgrade follows TSFC Board of Directors’ resolution to enter into the business rehabilitation process under the Bankruptcy Law B.E. 2483 after the company’s failure to meet the Securities and Exchange Commission’s (the SEC) immediate capital injection requirements. The decision makes TSFC most likely to miss payments of its upcoming financial obligations.
The rating will be lowered to “D” once TSFC actually defaults on its upcoming financial obligations.
On 4 November 2008, the SEC ordered TSFC to submit a recapitalization plan to the SEC. On 28 November 2008, after consideration of the recapitalization plan, the SEC required TSFC to submit a Bt279 million immediate capital injection plan in order to ensure that the company’s BIS ratio would meet the minimum requirement of 8%. After TSFC’s failure to fulfill the SEC’s immediate capital injection requirements, the company decided, on 12 December 2008, to seek approval from the SEC to enter into the business rehabilitation process under the Bankruptcy Law B.E. 2483.
The company’s decision indicates that the company is facing severe financial difficulty and cannot pay all financial obligations in full and on time, though the company still has some liquidity, by divesting its investment portfolio, to repay its upcoming financial obligations for a short period.
TRIS Rating previously downgraded TSFC’s rating from “A” to “BBB-” on 7 November 2008, following a significant deterioration of its capital as a result of a sharp drop in the SET Index during October 2008. The rating was further downgraded to “BB-” on 28 November 2008, which reflected high uncertainty of TSFC to fulfill the recapitalization plan. -- End
Company Rating: Downgraded to “C” from “BB-” CreditAlert Designation: NEGATIVE
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