/raid1/www/Hosts/bankrupt/TCRAP_Public/121017.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Wednesday, October 17, 2012, Vol. 15, No. 207
Headlines
A U S T R A L I A
APEX TELECOM: Internet Service Provider Placed in Liquidation
BLUECHIP PROPERTIES: Bank Debts Pushes Firm Into Receivership
URBAN CONTRACTORS: Goes Into Voluntary Administration
WRIGHTS FINE: Catering Boss Feels "Devastated" Over Liquidation
* S&P Affirms Ratings on 692 Australian Prime RMBS Tranches
C H I N A
SHANGHAI ZENDAI: Fitch Affirms 'B' Issuer Default Rating
ZTE CORP: Fitch Puts 'BB-' IDR on Rating Watch Negative
H O N G K O N G
ACE AHEAD: Creditors' Proofs of Debt Due Nov. 13
BAO LIMITED: Members' Final Meeting Set for Nov. 13
CCPEPA LIMITED: Suen Suk Ying Appointed as Liquidator
EF EDUCATIONAL: Placed Under Voluntary Wind-Up Proceedings
ENOCH HOLDINGS: Creditors' Meeting Set for Nov. 16
GAME LUX: Placed Under Voluntary Wind-Up Proceedings
GOLDEN LAND: Members' Final General Meeting Set for Nov. 15
HEYNES ENTERPRISES: Creditors' Proofs of Debt Due Oct. 31
HENDERSON INVESTMENT: Lee King Yue Appointed as Liquidator
LVMH WATCH: Members' Final Meeting Set for Nov. 13
I N D I A
DECCAN CHRONICLE: NPST Files Winding Up Petition
G. S. DISTRIBUTORS: CRISIL Rates INR90MM Loan at 'CRISIL B'
HILTON MOTORS: CRISIL Cuts Rating on INR89MM Loans to 'CRISIL D'
MOHAMMED ENTERPRISES: CRISIL Cuts Rating on INR250MM Loan to 'D'
PANKAJ ISPAT: CRISIL Cuts Ratings on INR152.5MM Loans to 'B-'
RADHA MADHAV: Delay in Loan Payment Cues CRISIL Junk Ratings
SHANKAR INDUSTRIES: CRISIL Upgrades Rating on INR69.5MM Loans
SHASHADHAR COLD: Delays in Loan Payment Cues CRISIL Junk Ratings
SONATA CERAMICA: Delays in Loan Payment Cues CRISIL Junk Ratings
SOORAJ AGRO: Delay in Loan Payment Cues CRISIL Junk Ratings
SUZLON ENERGY: Bid to Extend Bond Redemption Deadline Nixed
SWAMBHUNATH COLD: CRISIL Assigns 'D' Rating to INR97MM Loans
YASH JEWELLERY: Delays in Loan Servicing Cues CRISIL Junk Ratings
I N D O N E S I A
LIPPO KARAWACI: Fitch Puts 'BB-' Rating on Proposed Notes
LIPPO KARAWACI: Moody's Affirms B1 CFR; Rates Sr. Notes (P)B1
LIPPO KARAWACI: S&P Affirms 'BB-' CCR on Steady Performance
* Fitch Affirms Rating on Four Indonesian Banks; Outlook Stable
J A P A N
ELPIDA MEMORY: Micron Expects to Complete Purchase 1H 2013
K O R E A
* KOREA: Banking System Remains Vulnerable to Liquidity Risks
X X X X X X X X
* Upcoming Meetings, Conferences and Seminars
- - - - -
=================
A U S T R A L I A
=================
APEX TELECOM: Internet Service Provider Placed in Liquidation
-------------------------------------------------------------
SmartCompany reports that Ovee, which traded as Apex Telecom, has
been placed in liquidation, after an iiNet subsidiary hit the
company with a wind-up order when it failed to pay a AUD38,900
debt.
SmartCompany says the development highlights the ongoing trouble
for smaller players in the telecommunications industry, as larger
players edge out smaller companies in the race to sign new
members ahead of the National Broadband Network.
Chief regulatory officer Steve Dalby told The Australian the
company took legal action against Ovee for "failing to meet
agreed payment schemes put in place", and added that "the company
was not present or represented" at a hearing, according to
SmartCompany.
The application was made through iiNet's subsidiary TransACT,
which it bought in 2010, the report relays.
Ovee was placed into liquidation on October 12, with Henry Kazar
of Kazar Slaven appointed as liquidator, the report discloses.
Ovee, which traded as Apex Telecom, is an ACT-based internet
service provider.
BLUECHIP PROPERTIES: Bank Debts Pushes Firm Into Receivership
-------------------------------------------------------------
SmartCompany reports that Bluechip Properties, which owns a chain
of hotels operating under the Leisure Inn brand and turns over
AUD5 to AUD6 million a year, has slipped into receivership.
David Winterbottom of Korda Mentha has been appointed as receiver
of the company, which owns properties including Hobart's
Macquarie Inn and Woolmers Inn and Launceston's Penny Royal,
SmartCompany discloses.
The Macquarie Inn has already been listed for sale by Korda
Mentha, the report notes.
Bluechip is owned by Sydney property mogul Kurt Braune and the
Leisure Inn brand forms part of the 25-hotel StayWell Hospitality
Group.
Richard Doyle, director of StayWell, told SmartCompany that
Bluechip is a separate entity and Staywell manages the Bluechip
hotels, a role which is continuing despite the receivership.
According to the report, Mr. Doyle said his understanding is that
the hotels are trading strongly but were tipped into receivership
by existing debt obligations.
"The group got into difficulty because another entity associated
with their group was involved in the collapse of an office
facility in Sydney owned by New Invest, it was nothing to do with
the management," the report quotes Mr. Doyle as saying.
"My understanding is the reason the group is in trouble is the
bank was not paid under guarantee in relation to that property."
The major creditor is Bankwest, SmartCompany discloses.
SmartCompay notes Mr. Braune puts the reason for the collapse as
an ongoing dispute with StayWell, which had been heard in the
Supreme Court in March.
"We were continuing our negotiations with StayWell in good faith
and thought we were just about there," Mr. Braune, as cited by
SmartCompany, told The Australian Financial Review.
Mr. Braune said he had a good relationship with Bankwest until it
called in receivers "out of the blue," SmartCompany relays.
Mr. Winterbottom told SmartCompany the receivership has nothing
to do with the trading of the hotels but would not comment
further.
Bluechip Properties owns a chain of hotels operating under the
Leisure Inn brand.
URBAN CONTRACTORS: Goes Into Voluntary Administration
-----------------------------------------------------
Clarissa Thorpe at ABC News reports that Urban Contractors has
gone into administration with more than 60 jobs in doubt.
The company went into voluntary administration after a legal
dispute with the lead contractor of the ASIO site, Lend Lease,
according to ABC news.
The report relates that Urban Contractors Managing Director Mick
Burgess says the owners want to trade their way through the
financial difficulties.
"If it didn't go into administration then one of the creditors
might have got tired of not being paid and closed the company up.
. . . There was no chance to fight the cause or keep going
further on and trying to work the company out, so it keeps going.
. . . As a company, I tend to treat the business and the sub
contractors and suppliers as family and I don't like to lose any
of our families, so we've got to try to work our way through it,"
the report quoted Mr. Burgess as saying.
Mr. Burgess said around 10 staff have already been laid off, and
more jobs may have to go, the report notes.
"I'm trying to sell some of my own assets as well to put back
into the company to try to get as many people paid as possible .
. . . As well as keep fighting the cause and try to get paid for
what we believe that we are due anyway," the report quoted as Mr.
Burgees as saying.
The main cause of the financial issues is a legal dispute with
building company Lend Lease over work at the ASIO building, the
report notes.
The report adds that Urban Contractors also has staff working on
construction sites at Kingston Foreshore and at Veterans Park in
Civic.
Urban Contractors is a major ACT contractor working on the new
ASIO building.
WRIGHTS FINE: Catering Boss Feels "Devastated" Over Liquidation
---------------------------------------------------------------
Megan Doherty at The Canberra Times reports that distraught
Canberra caterer and owner of catering company Wrights Fine Food,
Fiona Wright, said she is "devastated" that her life's work is
being "torn apart" by decisions she believes are "unfounded and
callous."
The Canberra Times notes that the Supreme Court on Tuesday
ordered that Ms. Wright's companies be placed into liquidation
and be wound up. It also appointed Henry Kazar from Canberra
firm Kazar Slaven as liquidator.
According to the report, Mr. Kazar will be working to maximise
the value of the companies' assets and that could involve
continuing to keep Ms. Wright's businesses trading in the short-
term.
That does little to ease the concerns of what is understood to be
120 workers employed by the businesses, Ten and A Half Catering
and Wrights Fine Food, the report relays.
Ms. Wright confirmed, through a statement, that she had been hit
with an "unexpected" outstanding payroll tax bill that she had
been working with the Revenue Office and Tax Office to repay.
But she claims problems related to working under contract with
the National Gallery of Australia had contributed to her
companies being liquidated, the report says.
"An administrator has been appointed and all arms of this
catering company have been liquidated, even though such a
disastrous outcome for the company and staff could easily have
been avoided if the gallery had behaved in a different manner,"
the report quotes Ms. Wright as saying. "We are seeking legal
advice."
The Canberra Times notes the gallery has refused to respond to
the allegations other than to say it is working with the
liquidator examining Ms. Wright's businesses.
Wrights Fine Foods is a catering company based in Canberra.
* S&P Affirms Ratings on 692 Australian Prime RMBS Tranches
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on 692
prime residential mortgage-backed securities (RMBS) and raised
its ratings on 14 prime RMBS. Additionally, 10 tranches were
placed on CreditWatch with positive implications.
The complete list on the rating actions is accessible at:
http://is.gd/3xtRze
"These rating actions follow our review of all outstanding
Australian and New Zealand prime RMBS. The review incorporates
the impact of the rating outlook revision to negative from
stable, on Australian lenders' mortgage insurer Genworth
Financial Mortgage Insurance Pty Ltd. (Genworth Australia).
Genworth Australia provides mortgage insurance to a significant
amount of outstanding Australian prime RMBS transactions," S&P
said.
"The affirmations are based on our view that the affected
transactions have performed within our rating expectations. The
upgrades on the 14 tranches reflect our view that the
transactions have demonstrated strong collateral performance and
build-up of credit support. We believe that the upgraded
transactions can withstand stress scenarios consistent with the
higher rating levels," S&P said.
"The CreditWatch positive on 10 tranches in four transactions
reflects our view that these transactions have accumulated credit
enhancement as a percentage of their outstanding balances. We
will resolve the CreditWatch placements after conducting further
cash flow analysis under various stress scenarios for the
affected transactions," S&P said.
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Report
included in this credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com
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C H I N A
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SHANGHAI ZENDAI: Fitch Affirms 'B' Issuer Default Rating
--------------------------------------------------------
Fitch Ratings has affirmed China-based Shanghai Zendai Property
Ltd's Long-Term Issuer Default Rating (IDR) at 'B' with a Stable
Outlook. The agency has also affirmed the company's senior
unsecured rating at 'B'. The Recovery Rating is 'RR4'.
The ratings reflect Zendai's small operating scale and higher
funding needs relative to similar sized homebuilders given the
longer development cycle of integrated projects versus
residential projects. Other credit weaknesses include
unpredictable regulatory/policy risks in China, and a limited
track record in property development outside Shanghai. Its
ratings, on the other hand, are supported by Zendai's solid asset
quality and healthier liquidity following the completion of the
sale of its Shanghai Bund project this year
Fitch expects Zendai's H112 sales performance to have been weak,
and its full year contracted sales to be no higher than HKD2.5bn
(CNY2bn), given few new project sale launches and a large supply
of properties in China. Operating EBITDA margin decreased to 11%
in H112 from 40% in 2011, caused by weak revenue and higher
administrative expenses. Fitch expects gross margin to be within
the 40%-50% range for 2012, similar to historical levels, and
does not see contracted sales improving substantially in the near
future.
The company may need funding from other sources to expand its
business given expected weak contracted sales, possibly by
disposing of some of its strong investment properties, including
Zendai Thumb Plaza.
Zendai's financial position has improved on lower funding costs.
Adjusted debt/adjusted inventory fell below 30% in H112 from 43%
at end-2011 and unrestricted and restricted cash balance
increased to HKD1.1bn and HKD0.7bn, respectively, from HKD0.9bn
and HKD0.2bn following the disposal of its shareholdings in
Shanghai Zendai Bund and Shanghai Zendai Wudaokou. The proceeds
from the transaction were used to repay high-cost borrowings such
as a trust loan, offshore bonds, and other liabilities.
Zendai's ratings are also supported by its proven track record in
developing large-scale integrated commercial projects in the
greater Shanghai area, and by the reasonably solid asset quality
of its commercial and investment properties portfolio. Compared
with other China developers, it also has low exposure to the more
volatile residential property markets in high-tier cities of
China. Fitch notes that Zendai's recurrent income yields have
been reasonable at over 10%, which may be more significant to its
revenue when the commercial projects are more mature.
What Could Trigger A Rating Action?
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
-- lack of improvement in contracted sales for 2013
-- adjusted net debt/net inventory above 45% for a sustained
period
-- EBITDA margin below 20% on a sustained basis
-- adverse regulatory or economic developments
Positive: No positive rating action is expected over the next 12
months, unless there is substantial improvement of sales
performance and recurrent income on a sustained basis.
ZTE CORP: Fitch Puts 'BB-' IDR on Rating Watch Negative
-------------------------------------------------------
Fitch Ratings has placed China-based ZTE Corporation's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDR) of 'BB-'
on Rating Watch Negative (RWN).
The RWN follows the company's preliminary results announcement
for Q312 which were significantly worse than Fitch's expectations
and which place into doubt the company's ability to improve
profitability and cash flow to maintain credit metrics consistent
with a 'BB' category rating.
The RWN will be resolved following release of the full Q312
results, discussions with management and further analysis of the
company's ability to improve financial performance in 2013 and
2014.
The company announced a preliminary loss of CNY1.65bn-CNY1.75bn
for the nine months to 30 September 2012 (prior year period:
profit of CNY1.07bn). According to the preliminary announcement,
Q312 revenue declined 13% from a year ago due to centralisation
of procurement at Chinese carriers leading to slower domestic
orders and also due to delays in international projects.
Similarly, Q312 gross margin declined by 13 percentage points
reflecting recognition of a number of low-profitability contracts
in Europe, Asia and China. Thus, gross margins for the nine
months to 30 September 2012 are lower than the prior year period,
despite increasing revenue.
The company is also facing high-profile political difficulties in
the US, although this market currently represents just 5% of
ZTE's turnover. The US House Intelligence Committee has labelled
ZTE and the larger Huawei as threats to US national security -
largely on the premise of potential Chinese state influence. The
company is also cooperating with an investigation by the US
Department of Justice concerning deals with Iran.
ZTE responded to the US congressional committee report by
emphasizing its independence from state influence, the integrity
of its vendor-neutral network security systems, and how the value
of various telecom equipment components ZTE purchases from US
companies is significant compared with the revenue it derives
from the US. The company also expressed disappointment that the
two Chinese equipment makers had been singled out, and how the
report failed to consider Western telecom equipment vendors and
their Chinese joint-venture manufacturing partners in its
assessment, given that the vast majority of telecom equipment in
place in the US is in fact manufactured in China.
Margins for the Chinese telecom equipment manufacturers are under
pressure, partly because they typically need to offer significant
discounts to win strategic orders from large network operators in
developed markets. The extent of the discount required is only
likely to be greater for those markets where supposed security
concerns weigh against the Chinese exporters. This is despite
Fitch's view that the Chinese technology is highly competitive
and offers significant cost savings.
What Could Trigger a Rating Action?
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
-- sustained operating EBITDA below USD600m
-- sustained operating EBIT margin of less than 2%
-- sustained FFO-adjusted leverage above 6x.
Positive: The current Rating Watch is Negative. As a result,
Fitch's sensitivities do not currently anticipate developments
with a material likelihood, individually or collectively, of
leading to a rating upgrade.
================
H O N G K O N G
================
ACE AHEAD: Creditors' Proofs of Debt Due Nov. 13
------------------------------------------------
Creditors of Ace Ahead Limited, which is in members' voluntary
liquidation, are required to file their proofs of debt by
Nov. 13, 2012, to be included in the company's dividend
distribution.
The company's liquidator is:
Kong Chi How Johnson
25th Floor, Wing On Centre
111 Connaught Road
Central, Hong Kong
BAO LIMITED: Members' Final Meeting Set for Nov. 13
---------------------------------------------------
Members of Bao Limited will hold their final general meeting on
Nov. 13, 2012, at 10:00 a.m., at Unit 259-260, 2nd Floor, Tsim
Sha Tsui Centre, at 66 Mody Road, Tsim Sha Tsui East, in Kowloon.
At the meeting, Serge Guy Vota, the company's liquidator, will
give a report on the company's wind-up proceedings and property
disposal.
CCPEPA LIMITED: Suen Suk Ying Appointed as Liquidator
-----------------------------------------------------
Suen Suk Ying on Oct. 3, 2012, was appointed as liquidator of
CCPEPA Limited.
The liquidator may be reached at:
Suen Suk Ying
Room 1802, 18/F
Sunbeam Commercial Building
469-471 Nathan Road
Kowloon, Hong Kong
EF EDUCATIONAL: Placed Under Voluntary Wind-Up Proceedings
----------------------------------------------------------
At an extraordinary general meeting held on Sept. 30, 2012,
creditors of EF Educational Foundation for Foreign Study Limited
resolved to voluntarily wind up the company's operations.
The company's liquidators are:
Ying Hing Chiu
Chan Mi Har
1 Queen's Road
East, Hong Kong
ENOCH HOLDINGS: Creditors' Meeting Set for Nov. 16
--------------------------------------------------
Creditors of Enoch Holdings Limited will hold their meeting on
Nov. 16, 2012, at 11:00 a.m., for the purposes provided for in
Sections 241, 242, 243, 244, 251 and 255A of the Companies
Ordinance.
The meeting will be held at Unit 102, 1st Floor, Hong Kong Trade
Centre, at 161-167 Des Voeux Road Central, in Hong Kong.
GAME LUX: Placed Under Voluntary Wind-Up Proceedings
----------------------------------------------------
At an extraordinary general meeting held on Oct. 6, 2012,
creditors of Game Lux Limited resolved to voluntarily wind up the
company's operations.
The company's liquidators are:
Ng Kwok Wai
Lui Chi Kit
Unit A, 14/F, JCG Building
16 Mongkok Road
Mongkok, Kowloon
Hong Kong
GOLDEN LAND: Members' Final General Meeting Set for Nov. 15
-----------------------------------------------------------
Members of Golden Land Investments Limited will hold their final
general meeting on Nov. 15, 2012, at 11:00 a.m., at 35th Floor,
One Pacific Place, 88 Queensway, in Hong Kong.
At the meeting, Leung Hin Wai, the company's liquidators, will
give a report on the company's wind-up proceedings and property
disposal.
HEYNES ENTERPRISES: Creditors' Proofs of Debt Due Oct. 31
---------------------------------------------------------
Creditors of Heynes Enterprises Limited, which is in members'
voluntary liquidation, are required to file their proofs of debt
by Oct. 31, 2012, to be included in the company's dividend
distribution.
The company commenced wind-up proceedings on Oct. 5, 2012.
The company's liquidator is:
Fu Wing Cheung
Flat B, 39/F
Vista, 188 Fuk Wah Street
Sham Shui Po
Kowloon
HENDERSON INVESTMENT: Lee King Yue Appointed as Liquidator
----------------------------------------------------------
Lee King Yue on Oct. 10, 2012, was appointed as liquidator of
Henderson Investment Credit (2004) Limited.
The liquidator may be reached at:
Lee King Yue
72-76/F, Two International Finance Centre
8 Finance Street
Central, Hong Kong
LVMH WATCH: Members' Final Meeting Set for Nov. 13
--------------------------------------------------
Members of LVMH Watch & Jewellery Far East Limited will hold
their final general meeting on Nov. 13, 2012, at 10:00 a.m., at
Level 28, Three Pacific Place, at 1 Queen's Road East, in Hong
Kong.
At the meeting, Seng Sze Ka Mee Natalia and Cheng Pik Yuk, the
company's liquidators, will give a report on the company's wind-
up proceedings and property disposal.
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I N D I A
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DECCAN CHRONICLE: NPST Files Winding Up Petition
------------------------------------------------
The Times of India reports that the National Pension System
Trust, which invested its funds in the debt market through SBI
Pension Funds Pvt Ltd, one of its fund managers, is now aggrieved
that a sum of INR20 crore was held up in the commercial
instruments released by Deccan Chronicle Holdings Ltd and filed a
winding up petition in the HC seeking liquidation of DCHL and
settlement of its dues.
Justice Ramesh Ranganathan, who heard the matter, issued a notice
to DCHL and posted the matter to two weeks, the report relates.
TOI relates that the petitioner in the case told the court that
despite the passage of maturity date, the bonds issued by DCHL
were not honored and their money was not realized. Hence, they
were seeking company's liquidation. The trust also sought a
direction to the DCHL management not to alienate its assets in
the meanwhile, the report relays.
The judge, while hearing another winding up petition filed by
Photon Infotech, a software development company, which too bought
INR5 crore worth commercial instrument, gave three weeks time to
DCHL for reply, the report says.
Based in Secunderabad, India, Deccan Chronicle Holdings Limited
engages in the printing and publishing of newspapers and
periodicals. The company publishes Deccan Chronicle, an English
daily; Financial Chronicle, a financial daily; and Andhra Bhoomi,
a regional daily. It also owns franchise rights for the
Hyderabad team of the Indian Premier League.
G. S. DISTRIBUTORS: CRISIL Rates INR90MM Loan at 'CRISIL B'
-----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the cash
credit facility of G. S. Distributors Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 90 CRISIL B+/Stable (Assigned)
The rating reflects GSDL's below-average financial risk profile,
marked by a low profitability, and the company's modest scale of
operations and geographical concentration. These rating
weaknesses are partially offset by the benefits that GSDL derives
from its promoter's extensive experience in the trading business,
and its established relations with its suppliers and customers.
Outlook: Stable
CRISIL believes that GSDL will continue to benefit over the
medium term from its promoter's extensive industry experience.
CRISIL, however, believes that the company's financial risk
profile will remain weak because of low profitability. The
outlook may be revised to 'Positive' in case GSDL's financial
risk profile, particularly its liquidity, improves, supported by
higher-than-expected cash accruals. Conversely, the outlook may
be revised to 'Negative' in case the company's liquidity
deteriorates because of large working capital requirements or
lower-than-expected cash accruals.
GSDL was set up in 1997 by Mr. Gurpreet Singh Rekhi. It trades in
gift items, cosmetics, and prepaid Vodafone SIM cards in Punjab,
Haryana, and Himachal Pradesh. The company is based in Ludhiana
(Punjab).
For 2011-12 (refers to financial year, April 1 to March 31), GSDL
reported profit after tax (PAT) of INR79.0 million on net sales
of INR630.8 million, against a PAT of INR44.6 million on net
sales of INR358.3 million for 2010-11.
HILTON MOTORS: CRISIL Cuts Rating on INR89MM Loans to 'CRISIL D'
----------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Hilton Motors to 'CRISIL D' from 'CRISIL BB/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 9 CRISIL D (Downgraded
from 'CRISIL BB/Stable')
Inventory Funding 80 CRISIL D (Downgraded
Facility from 'CRISIL BB/Stable')
The downgrade reflects instances of delay by Hilton in servicing
its term loan. The delays have been caused by the firm's weak
liquidity, driven by its low cash accruals and large working
capital requirements. Its liquidity is expected to remain under
pressure over the medium term because of its low cash accruals.
Hilton has a below-average financial risk profile, marked by a
small net worth, high gearing, and weak debt protection metrics,
and is exposed to intense competition in the automobile
dealership market. However, the firm benefits from the extensive
experience of its proprietor in the automobile dealership
business.
About Hilton Motors
Hilton, a proprietorship concern set up by Mr. Josepherson
Antony, is an automobile dealer for Hyundai Motor India Ltd
(HMIL).
HMIL reported a profit after tax (PAT) of INR3.8 million on net
sales of INR690 million for 2011-12 (refers to financial year,
April 1 to March 31), as against a PAT of INR1.4 million on net
sales of INR753 million for 2010-11.
MOHAMMED ENTERPRISES: CRISIL Cuts Rating on INR250MM Loan to 'D'
----------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
Mohammed Enterprises Pvt Ltd to 'CRISIL D' from 'CRISIL B-
/Negative'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 200.0 CRISIL D (Downgraded from
'CRISIL B-/Negative')
Standby Line of Credit 30.0 CRISIL D (Downgraded from
'CRISIL B-/Negative')
Term Loan 20.0 CRISIL D (Downgraded from
'CRISIL B-/Negative')
The downgrade reflects instances of delay by MEPL in servicing
its term loan obligations; the delays have been caused by the
company's weak liquidity resulting from its large working capital
requirements.
MEPL also has an overall weak financial risk profile marked by a
high gearing and weak debt protection metrics, and is vulnerable
to volatility in foreign exchange rates. However, MEPL benefits
from its wide geographical reach and customer base and its
promoter's extensive experience in the tobacco export business.
About Mohammed Enterprises
MEPL was set up as a proprietorship firm in 1985; it is currently
being managed by the founder's son, Mr. Mohammed Mustafa. It was
reconstituted as a private limited company in 2000. The Guntur
(Andhra Pradesh)-based company processes raw tobacco.
MEPL reported a profit after tax (PAT) of INR10 million on net
sales of INR950 million for 2010-11 (refers to financial year,
April 1 to March 31), against a PAT of INR70 million on net sales
of INR680 million for 2009-10.
PANKAJ ISPAT: CRISIL Cuts Ratings on INR152.5MM Loans to 'B-'
-------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Pankaj Ispat Pvt Ltd to 'CRISIL B-/Stable' from 'CRISIL
B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 100 CRISIL B-/Stable (Downgraded
from 'CRISIL B+/Stable')
Term Loan 52.5 CRISIL B-/Stable (Downgraded
from 'CRISIL B+/Stable')
The rating downgrade reflects deterioration in PIPL's liquidity.
The company's liquidity has deteriorated because of rising input
costs over the past two years, leading to high average bank limit
utilisation of 99 per cent for the 12 months through June 2012;
occasionally, the bank facilities have also been over-utilised.
The weak liquidity of the company adversely impacts its debt
servicing ability.
The rating reflects PIPL's weak financial risk profile, marked by
a small net worth, high gearing, and weak debt protection
metrics, and marginal market share in the steel industry. These
rating weaknesses are partially offset by the ready local market
for PIPL's steel products.
Outlook: Stable
CRISIL believes that PIPL will continue to benefit over the
medium term from its promoters' established relations with steel
players in and around Raipur (Chhattisgarh). The outlook may be
revised to 'Positive' if PIPL's financial risk profile,
particularly its liquidity, improves significantly, driven by
more-than-expected increase in revenues and profitability, equity
infusion by promoters, or improved working capital management.
Conversely, the outlook may be revised to 'Negative' in case of
less-than-expected revenues or operating margin or large, debt-
funded capital expenditure programme.
About Pankaj Ispat
Set up in 2006 by the Chhattisgarh-based Agarwal family, PIPL
manufactures steel ingot and thermo-mechanically-treated bars.
The company commenced commercial operations in 2007-08 (refers to
financial year, April 1 to March 31). PIPL is currently being
managed by Mr. Lalit Kumar Agrawal and his son, Mr. Pankaj
Agrawal.
For 2010-11, PIPL reported a profit after tax (PAT) of INR2.7
million on net sales of INR836.7 million, against a PAT of INR2.5
million on net sales of INR421.8 million for 2009-10.
RADHA MADHAV: Delay in Loan Payment Cues CRISIL Junk Ratings
------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Radha
Madhav Industries Pvt Ltd to 'CRISIL D/CRISIL D' from 'CRISIL B-
/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2.5 CRISIL D (Downgraded
from 'CRISIL A4')
Cash Credit 47.5 CRISIL D (Downgraded
from 'CRISIL B-/Stable')
Letter of Credit 12.5 CRISIL D (Downgraded
from 'CRISIL A4')
Term Loan 65.2 CRISIL D (Downgraded
from 'CRISIL B-/Stable')
The downgrade reflects instances of delay by RMIPL in servicing
the interest and principal components of the term loan it availed
to set up a new plant in Bilaspur (Chattisgarh). The delays have
been caused by weakening of the company's liquidity because the
new plant is yet to be commissioned.
RMIPL's scale of operations is small, it has a weak financial
risk profile, marked by average net worth and weak debt
protection metrics, and it is exposed to risks related to
cyclicality in the steel industry, and large working capital
requirements. RMIPL, however, benefits from the extensive
industry experience of its promoters.
About Radha Madhav
Incorporated in 2003, RMIPL manufactures sponge iron. The plant
was initially located in Nayapara in Bilaspur (Chhattisgarh), but
due to its proximity to the state High Court and the pollution
restrictions, the management is in the process of shifting the
plant to Khasra in Bilaspur.
RMIPL reported a loss of INR7.3 million on net sales of INR43.9
million for 2010-11 (refers to financial year, April 1 to
March 31), as against a loss of INR5.9 million on net sales of
INR218.6 million for 2009-10.
SHANKAR INDUSTRIES: CRISIL Upgrades Rating on INR69.5MM Loans
-------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities
of Shankar Industries Rice Mill to 'CRISIL B-/Stable' from
'CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 60.0 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Term Loan 8.9 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Proposed Long-Term 0.6 CRISIL B-/Stable (Upgraded
Bank Loan Facility from 'CRISIL D')
The rating upgrade reflects the timely servicing of debt by SIRM
over the four months through September 2012. The upgrade also
factors in CRISIL's belief that SIRM will generate sufficient
cash accruals to service its debt over the medium term.
The ratings continue to reflect SIRM's below-average financial
risk profile, marked by a high gearing, weak debt protection
metrics, and weak liquidity, small scale of operations in the
intensely competitive and regulated rice processing industry, and
susceptibility to vagaries of the monsoon and to volatility in
raw material prices. These rating weaknesses are partially offset
by the extensive experience of SIRM's promoters in the rice
industry.
Outlook: Stable
CRISIL believes that SIRM will continue to benefit over the
medium term from its promoters' extensive industry experience.
The outlook may be revised to 'Positive' if the firm generates
large cash accruals or benefits from significant equity infusion
by its promoters, leading to improvement in its capital
structure. Conversely, the outlook may be revised to 'Negative'
in case SIRM's working capital cycle lengthens, leading to
deterioration in its liquidity, or if its profitability declines,
leading to further weakening of its financial risk profile.
About Shankar Industries
SIRM was established as a partnership firm in 1977. It is in the
rice milling business. The firm mainly deals in non-basmati rice,
including the sona masoori variety; it also processes small
quantities of basmati rice from time to time. SIRM is currently
managed by Mrs. R Vijayalakshmi and her two sons, Mr. R Pavan
Kumar and Mr. R Raghavendra.
For 2011-12 (refers to financial year, April 1 to March 31), SIRM
reported a net profit of INR0.9 million on net sales of INR198.8
million; the firm reported a net profit of INR1.4 million on net
sales of INR199.6 million for 2010-11.
SHASHADHAR COLD: Delays in Loan Payment Cues CRISIL Junk Ratings
----------------------------------------------------------------
CRISIL has assigned its 'CRISIL D/CRISIL D' ratings to the bank
facilities of Shashadhar Cold Storage Private Limited (part of
Samantha group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Working Capital 4.5 CRISIL D (Assigned)
Demand Loan
Term Loan 50 CRISIL D (Assigned)
Bank Guarantee 1.5 CRISIL D (Assigned)
Cash Credit 43 CRISIL D (Assigned)
The ratings reflect the instances of delays by Shashadhar in
servicing its debt; the delays have been caused by the group's
weak liquidity.
Samantha group also has weak financial risk profile, marked by a
small net worth, high gearing, and weak debt protection metrics,
and is exposed to the intensely competitive cold storage industry
in West Bengal. The company, however, benefits from its
promoters' extensive experience in the cold storage business.
For arriving at its ratings, CRISIL has combined the business and
financial risk profiles of Shashadhar and Swambhunath Cold
Storage Private Limited. CRISIL has used a consolidated approach
because the two entities are in the same line of business and are
under a common management and have significant operational and
financial synergies.
The Samantha group is a Paschim Medinipur (West Bengal) based
group engaged in cold storage of potatoes. Shashadhar was
incorporated in 2011 and Swambhunath was incorporated in 1994.
Both Shashadhar and Swambhunath operate facilities for the cold
storage of potatoes at Paschim Medinipur (West Bengal). Mr.
Swapan Samantha oversees the day to day operations of the group.
The Samantha group reported a loss of INR0.4 million on net sales
of INR16.7 million for 2010-11, against a loss of INR0.5 million
on sales of INR15.2 million for 2009-10.
SONATA CERAMICA: Delays in Loan Payment Cues CRISIL Junk Ratings
----------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of
Sonata Ceramica Pvt Ltd to 'CRISIL D/CRISIL D' from 'CRISIL
B+/Stable/CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 50 CRISIL D (Downgraded from
'CRISIL B+/Stable')
Letter of credit & 17.5 CRISIL D (Downgraded from
Bank Guarantee 'CRISIL A4')
Term Loan 29 CRISIL D (Downgraded from
'CRISIL B+/Stable')
The downgrade reflects delays by SCL in servicing its term debt;
the delays have been caused by the company's weak liquidity. This
is mainly because of short-term cash flow mismatches, as a result
of delay in receipt of payments from customers and increase in
inventory levels and thus full utilization of bank limits. SCL
operates in ceramic tile industry which is characterized by over
supply resulting in weak bargaining power with customers.
SCL also has an average financial risk profile, marked by average
gearing and debt protection metrics and large working capital
requirements. The company also has a small scale of operations in
the intensely competitive ceramic tile industry. However, SCL
benefits from its promoters' extensive industry experience and
the financial support that it receives from them.
About Sonata Ceramica
SCL, incorporated in 2002 by Mr. Patel, operates in the ceramic
glaze tiles industry in Mehsana (Gujarat).
For 2011-12, SCL reported a profit after tax (PAT) of INR3.1
million on net sales of INR203.9 million, against a PAT of INR0.8
million on net sales of INR190.1 million for 2010-11.
SOORAJ AGRO: Delay in Loan Payment Cues CRISIL Junk Ratings
-----------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Sooraj Agro Mills (India) Pvt Ltd to 'CRISIL D' from 'CRISIL
B-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 30 CRISIL D (Downgraded from
'CRISIL B-/Stable')
Term Loan 46.3 CRISIL D (Downgraded from
'CRISIL B-/Stable')
The rating downgrade reflects instances of delay by Sooraj in
servicing its term debt; the delays have been caused by the
company's weak liquidity. Sooraj has weak liquidity because of
its subdued accruals, which are a result of the start-up nature
and working capital intensity of its operations.
Sooraj also has a weak financial risk profile, marked by a high
gearing and weak debt protection metrics, and a small scale of
operations. Moreover, the company's operating margin is
susceptible to adverse regulatory changes and to volatility in
raw material prices. However, Sooraj benefits from its promoters'
extensive experience in the rice milling industry.
About Sooraj Agro
Sooraj commenced operations in 2009; it mills and processes paddy
into rice, rice bran, broken rice, and husk. The company is
promoted by Mr. A Surendran and his wife, Mrs. M Sumandahasini.
Sooraj, on a provisional basis, reported a net loss of INR1
million on net sales of INR146 million for 2011-12 (refers to
financial year, April 1 to March 31), against a net loss of INR5
million on net sales of INR99 million for 2010-11.
SUZLON ENERGY: Bid to Extend Bond Redemption Deadline Nixed
-----------------------------------------------------------
Business Standard reports that Suzlon Energy Ltd's woes have
increased after its bondholders rejected its request to extend
the time for the redemption of foreign currency convertible bonds
(FCCBs) of US$221 million (INR1,160 crore), due to mature this
month.
The Standard says while domestic bankers are expected to provide
some support lowering chances of a default, experts do not rule
out an extended period of subdued financial performance for the
company.
Suzlon, as of June 2012, reported total net debt of INR13,017
crore. This includes FCCBs of INR3,641 crore, a part of which,
worth US$360 million (about INR1,895 crore on Thursday), was
redeemed in July. With the help of 45 days extension, earlier
bonds were financed through the fresh borrowings, sale of assets
and internal accruals. But now, the company is again in the news
for the redemption of FCCBs of US$221 million due this month.
This time, the bondholders have rejected an extension of the
timeline, the Standard reports.
According to the report, experts believe this could theoretically
lead to a default and there is a possibility that the bondholders
might file for liquidation of the company. The Standard notes
Suzlon has been buying time from the bondholders so that it could
tap fund sources, including cash from its European subsidiary
REpower, sitting on cash of about INR1,700 crore, realisation of
dues from debtors of INR1,000 crore, raising low-cost funds
abroad and garnering resources t
While the company is still negotiating with the bondholders,
given its current situation, there is little possibility that
funds could be arranged from internal sources, says the Standard.
With market sentiments subdued, raising funds through the equity
route will be difficult. Hence, the best possible way could be
fresh borrowing, experts said.
The Standard reports that Suzlon's domestic lenders like State
Bank of India are reportedly willing to look for ways to
restructure its debt to help meet its obligations. Domestic banks
have large exposure to the company. Experts believe some
settlement will work out because liquidation is not in anybody's
interest and could take even more time than the company is asking
from its bondholders, the report adds.
About Suzlon Energy
Headquartered in Pune, India, Suzlon Energy Ltd (BOM:532667) --
http://www.suzlon.com/-- is engaged in the business of design,
development, manufacturing and supply of wind turbine generators
(WTGs) of a range of capacities and its components. Its
operations relate sale of WTGs and allied activities, including
sale/sub-lease of land, infrastructure development income; sale
of gear boxes, and sale of foundry and forging components.
Others primarily include power generation operations.
Suzlon Energy posted net losses of INR983 crore and INR1,324
crore in the year ended March 31, 2010 and 2011, respectively.
SWAMBHUNATH COLD: CRISIL Assigns 'D' Rating to INR97MM Loans
------------------------------------------------------------
CRISIL has assigned its 'CRISIL D/CRISIL D' ratings to the bank
facilities of Swambhunath Cold Storage Private Limited (part of
Samantha group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Working Capital 19.6 CRISIL D (Assigned)
Term Loan
Working Capital 6.5 CRISIL D (Assigned)
Demand Loan
Term Loan 5.4 CRISIL D (Assigned)
Bank Guarantee 1.5 CRISIL D (Assigned)
Cash Credit 64.0 CRISIL D (Assigned)
The rating reflects the instances of delays by Swambhunath in
servicing its debt; the delays have been caused by the group's
weak liquidity.
Samantha group also has weak financial risk profile, marked by a
small net worth, high gearing, and weak debt protection metrics,
and is exposed to the intensely competitive cold storage industry
in West Bengal. The company, however, benefits from its
promoters' extensive experience in the cold storage business.
For arriving at its ratings, CRISIL has combined the business and
financial risk profiles of Swambhunath and Shashadhar Cold
Storage Private Limited. CRISIL has used a consolidated approach
because the two entities are in the same line of business and are
under a common management and have significant operational and
financial synergies.
The Samantha group is a Paschim Medinipur (West Bengal) based
group engaged in cold storage of potatoes. Swambhunath was
incorporated in 1994 and Shashadhar was incorporated in 2011.
Both Swambhunath and Shashadhar operate facilities for the cold
storage of potatoes at Paschim Medinipur (West Bengal). Mr.
Swapan Samantha oversees the day to day operations of the group.
The Samantha group reported a loss of INR0.4 million on net sales
of INR16.7 million for 2010-11, against a loss of INR0.5 million
on sales of INR15.2 million for 2009-10.
YASH JEWELLERY: Delays in Loan Servicing Cues CRISIL Junk Ratings
-----------------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facilities
of Yash Jewellery Pvt Ltd (Yash; part of the Dynamix group) to
'CRISIL D' from CRISIL B-/Stable, while reaffirming the its
rating on the company's short-term facilities at 'CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Corporate Loan 350 CRISIL D (Downgraded from
'CRISIL B-/Stable')
Packing Credit 245 CRISIL A4 (Reaffirmed)
Post-Shipment Credit 605 CRISIL A4 (Reaffirmed)
Standby Letter of Credit 844.4 CRISIL A4 (Reaffirmed)
Term Loan 115.6 CRISIL D (Downgraded from
'CRISIL B-/Stable')
The downgrade on the long term rating reflects delays by Yash in
meeting its term loan obligations. These delays have been caused
by the company's weak liquidity, driven by large receivables from
the American subsidiary of the group, Jewel America.
The Dynamix group has a weak financial risk profile, marked by
high gearing and weak debt protection metrics. Besides, the group
has large working capital requirements, resulting in weak
liquidity, and there is geographical concentration in its revenue
profile. However, the Dynamix group has an established market
position in the jewellery industry, and sound manufacturing
facilities.
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of Yash, Dynamix Chains Manufacturing Pvt
Ltd (Dynamix Chains; rated 'CRISIL D /CRISIL A4'), Say India
Jewellers Pvt Ltd (Say India; 'CRISIL A4'), Lily Jewellery Pvt
Ltd (Lily; 'CRISIL B-/Stable'), Rolly Jewellery Pvt Ltd (Rolly;
'CRISIL B-/Stable/CRISIL A4'), Dania Oro Jewellery Pvt Ltd (Dania
Oro; 'CRISIL B-/Stable/CRISIL A4'), Jewel America Inc (Jewel
America), and Barjon Inc (Barjon). This is because all these
companies, collectively referred to as the Dynamix group, are
under a common promoter group, in the same line of business, and
have operational inter-linkages and fungible cash flows.
The Dynamix group of companies is promoted by Mr. Pramod Goenka.
The group manufactures gold, silver, and diamond-studded
jewellery, which is mainly exported to the US and the UK.
Yash, Say India, Lily and Dania Oro (set up in November 2006, May
1995, February 2004, and February 2006 respectively), export
diamond-studded gold jewellery, while Rolly (established in
January 2005) exports light-weight electro-form jewellery.
Dynamix Chains, established in October 2007, manufactures
specialised chains and pendants, which are exported to the US.
Jewel America, a leading jewellery wholesaler in the US, was
acquired by the group in February 2009. The group also operates
through 176 outlets in larger stores, such as Shoppers Stop and
Lifestyle, and through two standalone stores. All the sales are
made through Nascent Jewellery, which is the domestic subsidiary
of the group. The sales are made under the brands Nirvana and
Viola.
Yash, on a standalone basis, reported a profit after tax (PAT) of
INR27 million on net sales of INR1.2 billion for 2010-11 (refers
to financial year, April 1 to March 31), against a PAT of INR27.2
million on net sales of INR1.0 billion for the previous year.
=================
I N D O N E S I A
=================
LIPPO KARAWACI: Fitch Puts 'BB-' Rating on Proposed Notes
---------------------------------------------------------
Fitch Ratings has assigned Indonesia-based PT Lippo Karawaci
Tbk's (LK, 'BB-'/Stable) proposed notes due 2019 and 2020
expected 'BB-(EXP)' ratings. The bonds are to be issued by Theta
Capital Pte. Ltd. and guaranteed by LK.
Theta Capital will issue bonds as a tap to the existing USD150m
7% notes due 2019, while the 2020 new notes will be exchanged for
the existing USD395.6m notes due 2015. Both existing issues are
rated 'BB-'.
The final ratings on the new issues are contingent upon receipt
of the final documents conforming to information already
received.
The expected ratings are in line with LK's Long-term Foreign
Currency Issuer Default Ratings (IDRs) and senior unsecured
rating of 'BB-'.
LK plans to use the proceeds from the proposed tap issue to fund
capex and for general corporate purposes. Fitch is of the view
that the incremental debt will not impair LK's current financial
profile, which is supported by Indonesia's favourable long-term
demand for residential properties and healthcare services, a
continued strong recurring income base, and LK's demonstrated
track record in these businesses.
A high proportion of recurring income from healthcare,
hospitality and infrastructure, and property and portfolio
management helps mitigate the impact of volatile income from
property development and allows the company to maintain a sound
financial profile. This recurring income provides adequate
interest and fixed charge coverage. LK's ratings also reflect
its well-distributed debt maturity profile.
What Could Trigger a Rating Action?
Positive: Not foreseen in the medium term as LK's operating
exposure to the cyclical real estate industry is high.
Negative: Future developments that may, individually or
collectively, lead to a negative rating
action include:
-- Recurring EBITDA interest cover falling below 1.5x
-- Recurring EBITDA fixed-charge cover falling below 1.25x
-- Failure to pre-fund projected capex
LIPPO KARAWACI: Moody's Affirms B1 CFR; Rates Sr. Notes (P)B1
-------------------------------------------------------------
Moody's Investors Service has affirmed the B1 corporate family
rating and senior unsecured ratings of PT Lippo Karawaci Tbk.
Moody's has also assigned a (P)B1 rating to the proposed USD
senior unsecured notes issued by Theta Capital Pte Ltd -- and
guaranteed by LK and some of its subsidiaries -- in exchange for
the existing senior unsecured notes issued by Sigma Capital Pte
Ltd.
The ratings outlook remains positive.
Ratings Rationale
LK announced two proposed bond issuances on 15 October, including
(i) an exchange offer to issue eight-year senior unsecured notes,
in exchange for the existing senior unsecured notes issued by
Sigma Capital, and (ii) the reopening of existing senior
unsecured notes issued by Theta Capital.
"LK will further extend its debt maturity profile, bolster its
strong liquidity position and strengthen its ability to pursue
its aggressive expansion plan, if the planned bond issuances are
successful," says Jacintha Poh, a Moody's Analyst.
"However, total debt and interest expense will rise in the near-
term, negatively affecting LK's credit metrics in FY2012. On the
other hand, the company will only gradually benefit from
sustained improvements in recurring income over the next two
years," adds Ms. Poh, who is also the Lead Analyst for LK.
LK intends to construct 20 hospitals and 15 retail malls over the
medium-term, of which construction of three hospitals and Kemang
Village Mall have since been completed in 3Q 2012 Given that its
capital expenditure is likely to incorporate some level of debt
funding (including the proposed bond issuance), its gearing and
leverage ratios could deteriorate.
"Nevertheless, LK has consistently held adequate cash holdings,
and maintained a well-balanced debt maturity profile. Moody's
therefore believes the company will continue to balance its
growth and financial discipline," says Ms. Poh.
The funding of its expansion plan will also depend on its ability
to sell completed hospitals and retail malls to its sponsored
REITs -- First REIT and Lippo Malls Indonesia Retail Trust
(LMIRT).
If the bond issuances are successful, LK's next significant debt
maturity will be in May 2019.
As of 30 June 2012, the company had cash and cash equivalents of
IDR2.9 trillion (US$307 million).
Moody's expects LK's interest coverage to decline in FY2012 due
to the higher interest expense from the bond issuances, although
the situation could improve in the medium-term if LK successfully
increases the scale of its operations.
Moody's expects the company's operating cash flow and associated
credit metrics to remain volatile over the next three years, due
to the heavy working capital requirements.
In addition, in November 2011, shareholders approved a share
buyback up to an aggregate value of IDR600 billion, with the
buyback period valid for 18 months.
"The development risks associated with the expansion plans are
mitigated by the company's diversified property portfolio and
growing recurring income. Although Moody's expects marketing
sales to moderate after the strong performance in FY2011, the
healthcare segment will remain resilient," says Poh.
"LK's ability to grow its recurring income hinges on the success
of its asset-light strategy, which ultimately relies on the
ability of First REIT and LMIRT to absorb the completed hospital
and retail mall developments," Poh adds.
On 5 April 2012, LK's rating outlook was changed to positive to
reflect the strong growth in recurring income from its healthcare
and hospitality segments and infrastructure development, as well
as the property and portfolio management businesses, which
contributed approximately 48% of its FY2011 revenue.
The ratings could be upgraded to Ba3, if LK: 1) maintains
financial discipline while pursuing growth, 2) continues to be
well-supported by stable recurring income from its retail malls,
healthcare, hospitality and property and portfolio management
businesses, 3) achieves sustained sales performance and generates
improved cash flows, and 4) further strengthens its recurring
income.
Credit metrics that will support an upgrade include recurring
EBITDA/interest coverage above 1.5x-2.0x, EBITDA/interest
coverage above 3.0x-3.5x, and adjusted leverage below 45%-50% on
a sustained basis.
On the other hand, the ratings outlook could return to stable if
LK's financial and liquidity profiles weaken due to 1) the
company failing to execute its business plans, 2) a deterioration
in the property market, resulting in protracted weakness in LK's
operations and credit profile, and 3) a material depreciation in
the rupiah, which in turn increases the company's debt-servicing
obligations.
The principal methodology used in rating PT Lippo Karawaci Tbk
and Theta Capital Pte Ltd was the Global Homebuilding Industry
Methodology published in March 2009.
PT Lippo Karawaci Tbk is one of the largest property developers
in Indonesia, with a sizable land bank of around 1,443 ha as of
30 June 2012. Since 2004, the company has diversified into the
healthcare and hospitality businesses, as well as infrastructure
development. Its recurring income continues to grow, comprising
around 50% of total revenue over the last three years.
LIPPO KARAWACI: S&P Affirms 'BB-' CCR on Steady Performance
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB-' long-term
corporate credit rating on Indonesia-based property developer PT
Lippo Karawaci Tbk. The outlook is stable. "We also affirmed our
long-term 'axBB+' ASEAN regional scale rating on the company. At
the same time, we affirmed the 'BB-' issue rating on all of the
company's outstanding senior unsecured notes," S&P said.
"We also assigned our 'BB-' issue rating and 'axBB+' ASEAN
regional scale rating to a proposed issue of US$395.6 million
senior notes due 2020 and US$100 million senior notes due 2019 by
Theta Capital Pte Ltd., a special purpose vehicle that Lippo
Karawaci owns. Lippo Karawaci and some of its subsidiaries will
guarantee these notes," S&P said.
"We affirmed the rating because we believe Lippo Karawaci's
improving operating performance is sustainable over the next 12
months," said Standard & Poor's credit analyst Wee Khim Loy. "The
continued strong sales of the company's property development
projects and an increasing contribution from its healthcare
business will support its operating performance."
"Our affirmation assumes that: (1) Lippo Karawaci will
successfully exchange the 2020 notes for its existing US$395.6
million 2015 notes--as it intends to do; and (2) a net increase
in the company's debt of about US$100 million, given its plans to
use the proceeds from the US$100 million 2019 notes to fund the
expansion of its hospital and retail mall businesses, and for
general corporate purposes."
"In our view, the increase in debt will not significantly alter
Lippo Karawaci's financial risk profile. In our base-case
scenario, we expect the company's ratio of lease-adjusted debt to
EBITDA to improve to less than 4.5x by the end of 2013,
underpinned by strong presales of properties, increasing
contributions from new hospitals, and a sale of stabilized assets
into listed REITs. However, the ratio will rise to about 4.6x-
4.8x in the next six months due to the significantly higher debt.
The company's operating performance in the first half of 2012 was
significantly better than our expectation. Revenue improved 28%
to Indonesian rupiah (IDR) 2.4 trillion while pre-tax profit was
43% higher at IDR655 billion compared with the same period in
2011," S&P said.
"Our outlook for the Indonesian property market is positive,
underpinned by steady economic growth in Indonesia, increasing
urbanization, and relatively low mortgage rates," said Ms. Loy.
"Demand for residential and industrial properties should remain
resilient even though economic growth will slow in the next 12
months."
"However, we view Lippo Karawaci's debt appetite to be very
aggressive. The company raised US$150 million in May 2012, also
to fund the expansion of its healthcare and shopping mall
businesses. With the proposed issue of US$100 million, we project
Lippo Karawaci's debt to reach US$650 million as of Dec. 31,
2012, an almost two-fold increase from US$350 million as of Dec.
31, 2010.
In our view, there is limited headroom for the company to take on
additional debt at the current rating level. Any slippage in its
operating performance, particularly in its property sales, or a
further increase in debt would no longer be commensurate with a
'BB-' rating," S&P said.
"Lippo Karawaci plans to issue the proposed notes due 2020 in
exchange for US$395.6 million guaranteed notes due 2015. The
proposed issue will extend the company's debt maturity profile.
We do not view this exchange offer as distressed under our
criteria because we believe noteholders would receive no less
than the value of the original securities should they accept the
offer," S&P said.
"The stable outlook reflects our expectation that Lippo
Karawaci's strong growth from its property development and
healthcare businesses, adequate profitability, and good financial
flexibility will translate to a financial performance--over the
next 12 months--that is commensurate with the rating. The stable
outlook also factors in the sale of assets to Lippo Karawaci's
affiliates in the next six months, the proceeds of which we
expect the company will use to fund capital expenditure," S&P
said.
* Fitch Affirms Rating on Four Indonesian Banks; Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed the ratings of four Indonesia state-
owned banks - PT Bank Mandiri (Persero) Tbk, PT Bank Rakyat
Indonesia (Persero) Tbk, PT Bank Negara Indonesia (Persero) Tbk
and PT Bank Tabungan Negara (Persero) Tbk.
The ratings reflect likely continuing state support for these
state-owned banks in times of need. This is based on the
government's majority ownership, as well as the banks' systemic
importance to the domestic economy and their policy role. The
four banks together accounted for 35.2% of system assets at end-
H112. BTN's National Long-Term rating is lower compared with
other state-owned banks' to reflect their weaker systemic impact.
Changes to the sovereign rating ('BBB-'/Stable) would lead to
corresponding changes to the banks' ratings. Deterioration in
the state-owned banks' standalone financial profile is unlikely
to impact their IDRs and National Rating unless the factors
underpinning state support also weaken.
Mandiri's Viability Rating (VR) of 'bb+' reflects its improved
asset quality, healthy profitability, satisfactory
capitalisation, majority state ownership and position as
Indonesia's largest bank. BRI's VR of 'bb+' reflects its
sustained strong profitability -- which is among the highest in
the industry -- its position as Indonesia's second-largest bank
focusing on micro-lending with satisfactory asset quality. BNI's
VR of 'bb' reflects the bank's comparatively weaker, albeit
improving, profitability and asset quality and a smaller
franchise than those of Mandiri and BRI.
Rating upside on the VR may result from sustained healthy
profitability and capitalisation, and consistent improvement in
credit risk management. Rating downside may result from rapid
loan growth adversely affecting asset quality and capital, and
significantly weakened profitability.
Strong loan growth in 2010-2012 and a challenging global economic
outlook could lead to an increase in non-performing loans in
2013. Fitch believes the likely deterioration in asset quality
should, nevertheless, be manageable, given the banks' improved
credit risk management and diversified credit portfolio.
Mandiri has gradually diversified to consumer loans as corporate
loans fell to around 34% of total loans at end-H112 from 42% at
end-2008. The portion of Mandiri's and BNI's restructured loans
declined to 4%-5% at end-June 2012, from 5.5%-6.5% at end-2010.
BRI's core micro and consumer lending, which accounted for 51% of
total loans at end-H112, remained solid with non-performing loans
below 2% in 2011-H112. The newly imposed minimum down-payment of
30% for mortgages will over the medium term improve the loan
quality of mortgage lender BTN. The state-owned banks' strong
profitability and high provision cover should continue to provide
sufficient buffer against more challenging economic conditions.
Fitch expects the Indonesian state-owned banks' financial
performance to remain healthy and well-capitalized in the medium
term, underpinned by their moderating loan growth, low funding
costs, stronger fee income and manageable credit costs. Based on
the agency's stressed test the state-owned banks have sufficient
pre-provision profit to tolerate higher loan losses up to 6% of
total loans for BRI, 4%-5% for Mandiri and BNI to 2%-3% for BTN.
These are above average historical credit losses witnessed during
2009-H112 of less than 1% for BTN, 1% for Mandiri, and 2% for BRI
and BNI. BTN's impairment charges are lower than that of the
other three state-owned banks as the recoveries of NPLs from
residential loans have been consistently high and provide
additional buffer against loan impairments.
Mandiri is the largest bank in Indonesia with 14% of system
assets at end-H112. BRI is the second-largest bank at 12% of
system assets and has the most extensive distribution network in
Indonesia and a generally unchallenged franchise in rural micro-
lending. BNI is the fourth-largest bank at 8% of system assets.
BTN is the tenth-largest bank in Indonesia focusing on mortgage
lending.
The subordinate debt rating for BRI is notched down three levels
from its standalone National Rating derived from its VR,
comprising one notch for loss severity and two notches for non-
performance risk.
The list of rating actions is as follows:
Mandiri:
-- Long-Term Foreign-Currency (LTFC) IDR affirmed at 'BBB-';
Outlook Stable
-- Long-Term Local-Currency (LTLC) IDR affirmed at 'BBB-';
Outlook Stable
-- Short-Term Foreign-Currency (STFC) IDR affirmed at 'F3'
-- Support Rating Floor affirmed at 'BBB-'
-- Support Rating affirmed at '2'
-- Viability Rating affirmed at 'bb+'
-- National Long-Term Rating affirmed at 'AAA(idn)'; Stable
Outlook
BRI:
-- LTFC IDR affirmed at 'BBB-'; Outlook Stable
-- STFC IDR affirmed at 'F3'
-- Support Rating Floor affirmed at 'BBB-'
-- Support Rating affirmed at '2'
-- Viability Rating affirmed at 'bb+'
-- National Long-Term Rating affirmed at 'AAA(idn)'; Stable
Outlook
-- Rupiah subordinated debt II/2009 affirmed at 'A+(idn)
BNI:
-- LTFC and LTLC IDR affirmed at 'BBB-'; Outlook Stable
-- STFC IDR affirmed at 'F3'
-- Support Rating Floor affirmed at 'BBB-'
-- Support Rating affirmed at '2'
-- Viability Rating affirmed at 'bb'
-- National Long-Term Rating affirmed at 'AA+(idn)'; Stable
Outlook
-- Senior unsecured bond affirmed at 'BBB-'
BTN
-- National Long-Term Rating affirmed at 'AA(idn)'; Stable
Outlook
-- Rupiah senior bond affirmed at 'AA(idn)'
-- Rupiah senior bond programme affirmed at 'AA(idn)'
=========
J A P A N
=========
ELPIDA MEMORY: Micron Expects to Complete Purchase 1H 2013
----------------------------------------------------------
Reuters reports that Micron Technology's chief executive said he
expects to complete the acquisition of failed Japanese memory
chipmaker Elpida Memory Inc in the first half of next year,
despite opposition from a group of bondholders.
Reuters notes Micron, which is losing money due to a crumbling PC
industry, wants to create larger economies of scale and offered
in early July to buy Elpida for about $750 million in cash and to
pay creditors a total of $1.75 billion in annual installments
through 2019.
However, a group of Elpida bondholders said Micron is offering
too little for the chipmaker, the report relays.
Reuters says a committee set up by a Japanese court to examine
Elpida's proposal to be taken over by Micron, along with a
proposal by the bondholders, is expected to make a recommendation
by October 29, later than earlier estimated.
"We still expect to close this in the first half of 2013. Exactly
when that is, I can't say with a lot of precision because I think
really the key domino is -- when we get regulatory approval from
all the concerned countries," Reuters quotes Micron Chief
Executive Mark Durcan as saying at an analysts event in Boise,
Idaho, where Micron is based.
About Elpida Memory
Elpida Memory Inc. (TYO:6665) -- http://www.elpida.com/ja/-- is
a Japan-based company principally engaged in the development,
design, manufacture and sale of semiconductor products, with a
focus on dynamic random access memory (DRAM) silicon chips. The
main products are DDR3 SDRAM, DDR2 SDRAM, DDR SDRAM, SDRAM,
Mobile RAM and XDR DRAM, among others. The Company distributes
its products to both domestic and overseas markets, including the
United States, Europe, Singapore, Taiwan, Hong Kong and others.
The company has eight subsidiaries and two associated companies.
After semiconductor prices plunged, Japan's largest maker of DRAM
chips filed for bankruptcy in February with liabilities of 448
billion yen ($5.6 billion) after losing money for five quarters.
Elpida Memory and its subsidiary, Akita Elpida Memory, Inc.,
filed for corporate reorganization proceedings in Tokyo District
Court on Feb. 27, 2012. The Tokyo District Court immediately
rendered a temporary restraining order to restrain creditors from
demanding repayment of debt or exercising their rights with
respect to the company's assets absent prior court order.
Atsushi Toki, Attorney-at-Law, has been appointed by the Tokyo
Court as Supervisor and Examiner in the case.
Elpida Memory Inc. sought the U.S. bankruptcy court's recognition
of its reorganization proceedings currently pending in Tokyo
District Court, Eight Civil Division. Yuko Sakamoto, as foreign
representative, filed a Chapter 15 petition (Bankr. D. Del. Case
No. 12-10947) for Elpida on March 19, 2012.
=========
K O R E A
=========
* KOREA: Banking System Remains Vulnerable to Liquidity Risks
-------------------------------------------------------------
Moody's Investors Service says that Korean banks are now more
resilient against foreign currency liquidity stress than they
were during the global financial crisis in 2008-2009.
"The Korean banking system remains vulnerable to foreign currency
funding risks because the banks still have a structural reliance
on wholesale funding, but they have also made clear improvements
that mitigate the risk," says Youngil Choi, a Moody's Vice
President and Senior Credit Officer.
Choi was speaking on the release of a report titled "Korean
Banks: More Resilient to Foreign Currency Liquidity Risks".
The report discusses the key measures that Korean banks have
taken since 2009 to improve their foreign currency funding and
liquidity profiles, including: (1) terming out their debt
maturities, (2) diversifying their sources of debt, and (3)
increasing the size of their liquidity buffers.
"The main drivers of the improvements in liquidity have been
tighter regulations, increased government oversight and better
market conditions, which have given Korean banks ready access to
term financing in multiple currencies," adds Choi.
The Moody's report notes that Korean banks have improved their
debt maturity profiles as they have been able to refinance short-
term debt with long-term debt. For example, Moody's survey of the
seven largest banks shows that the ratio of their short-term
foreign currency debt to total foreign currency debt improved to
51% at end-June 2012 from 56% at end-2011.
These banks have also diversified their foreign currency debt
structures in terms of currency. The proportion of their foreign
currency debt in currencies other than USD, euro and yen
increased to 15.6% in 1H2012 from 11.2% at end-2009. By contrast,
their euro-denominated debt fell to 5.5% from 11.2% over the same
period.
Korean banks have further boosted their liquidity buffers --
including foreign currency cash and deposit assets -- to mitigate
against possible refinancing risks related to any potential
disruption in the international capital markets.
"We also believe the government's demonstrated willingness, as
well as its improved capacity, to support the banks has added a
buffer that protects their credit profiles against extreme
scenarios," says Choi.
Korea's external liabilities, with short-term original maturities
-- as a proportion of its total foreign currency reserves --
improved to 46.5% at end-June 2012, from 79.3% at end-September
2008.
===============
X X X X X X X X
===============
* Upcoming Meetings, Conferences and Seminars
---------------------------------------------
Oct. 18, 2012
AMERICAN BANKRUPTCY INSTITUTE
International Insolvency & Restructuring Symposium
Parco dei Principi Grand Hotel & Spa, Rome, Italy
Contact: 1-703-739-0800; http://www.abiworld.org/
Oct. 26, 2012
AMERICAN BANKRUPTCY INSTITUTE
NCBJ/ABI Educational Program
San Diego Marriott Marquis and Marina, San Diego, Calif.
Contact: 1-703-739-0800; http://www.abiworld.org/
Nov. 1-2, 2012
AMERICAN BANKRUPTCY INSTITUTE
Corporate Restructuring Competition
Wharton University of Pennsylvania, Philadelphia, Pa.
Contact: 1-703-739-0800; http://www.abiworld.org/
Nov. 1-3, 2012
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Westin Copley Place, Boston, Mass.
Contact: http://www.turnaround.org/
Nov. 12, 2012
AMERICAN BANKRUPTCY INSTITUTE
Detroit Consumer Bankruptcy Conference
[Location Undetermined]
Contact: 1-703-739-0800; http://www.abiworld.org/
Nov. 26, 2012
BEARD GROUP, INC.
19th Annual Distressed Investing Conference
The Helmsley Park Lane Hotel, New York, N.Y.
Contact: 240-629-3300 or http://bankrupt.com/
Nov. 29-30, 2012
MID-SOUTH COMMERCIAL LAW INSTITUTE
33rd Annual Bankruptcy & Commercial Law Seminar
Nashville Marriott at Vanderbilt, Nashville, Tenn.
Contact: 1-703-739-0800; http://www.abiworld.org/
Nov. 29 - Dec. 1, 2012
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
JW Marriott Starr Pass Resort & Spa, Tucson, Ariz.
Contact: 1-703-739-0800; http://www.abiworld.org/
Dec. 4-8, 2012
AMERICAN BANKRUPTCY INSTITUTE
ABI/SJUSL Mediation Training Symposium
St. John's University, Queens, N.Y.
Contact: 1-703-739-0800; http://www.abiworld.org/
Feb. 20-22, 2013
AMERICAN BANKRUPTCY INSTITUTE
VALCON
Four Seasons Las Vegas, Las Vegas, Nev.
Contact: 1-703-739-0800; http://www.abiworld.org/
Apr. 10-12, 2013
TURNAROUND MANAGEMENT ASSOCIATION
TMA Spring Conference
JW Marriott Chicago, Chicago, Ill.
Contact: http://www.turnaround.org/
Apr. 18-21, 2013
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
Gaylord National Resort & Convention Center,
National Harbor, Md.
Contact: 1-703-739-0800; http://www.abiworld.org/
June 13-16, 2013
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort, Traverse City, Mich.
Contact: 1-703-739-0800; http://www.abiworld.org/
July 11-13, 2013
AMERICAN BANKRUPTCY INSTITUTE
Northeast Bankruptcy Conference
Hyatt Regency Newport, Newport, R.I.
Contact: 1-703-739-0800; http://www.abiworld.org/
July 18-21, 2013
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Workshop
The Ritz-Carlton Amelia Island, Amelia Island, Fla.
Contact: 1-703-739-0800; http://www.abiworld.org/
Aug. 8-10, 2013
AMERICAN BANKRUPTCY INSTITUTE
Mid-Atlantic Bankruptcy Workshop
Hotel Hershey, Hershey, Pa.
Contact: 1-703-739-0800; http://www.abiworld.org/
Aug. 22-24, 2013
AMERICAN BANKRUPTCY INSTITUTE
Southwest Bankruptcy Conference
Hyatt Regency Lake Tahoe, Incline Village, Nev.
Contact: 1-703-739-0800; http://www.abiworld.org/
Oct. 3-5, 2013
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Marriott Wardman Park, Washington, D.C.
Contact: http://www.turnaround.org/
Nov. 1, 2013
AMERICAN BANKRUPTCY INSTITUTE
NCBJ/ABI Educational Program
Atlanta Marriott Marquis, Atlanta, Ga.
Contact: 1-703-739-0800; http://www.abiworld.org/
Dec. 2, 2013
BEARD GROUP, INC.
19th Annual Distressed Investing Conference
The Helmsley Park Lane Hotel, New York, N.Y.
Contact: 240-629-3300 or http://bankrupt.com/
Dec. 5-7, 2013
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Terranea Resort, Rancho Palos Verdes, Calif.
Contact: 1-703-739-0800; http://www.abiworld.org/
*********
Tuesday's edition of the TCR-AP delivers a list of indicative
prices for bond issues that reportedly trade well below par.
Prices are obtained by TCR-AP editors from a variety of outside
sources during the prior week we think are reliable. Those
sources may not, however, be complete or accurate. The Tuesday
Bond Pricing table is compiled on the Friday prior to
publication. Prices reported are not intended to reflect actual
trades. Prices for actual trades are probably different. Our
objective is to share information, not make markets in publicly
traded securities. Nothing in the TCR-AP constitutes an offer
or solicitation to buy or sell any security of any kind. It is
likely that some entity affiliated with a TCR-AP editor holds
some position in the issuers' public debt and equity securities
about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR-AP. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Friday's edition of the TCR-AP features a list of companies with
insolvent balance sheets obtained by our editors based on the
latest balance sheets publicly available a day prior to
publication. At first glance, this list may look like the
definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical
cost net of depreciation may understate the true value of a
firm's assets. A company may establish reserves on its balance
sheet for liabilities that may never materialize. The prices at
which equity securities trade in public market are determined by
more than a balance sheet solvency test.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. Valerie U. Pascual, Marites O. Claro, Joy A. Agravante,
Rousel Elaine T. Fernandez, Ivy B. Magdadaro, Frauline S.
Abangan, and Peter A. Chapman, Editors.
Copyright 2012. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding,
electronic re-mailing and photocopying) is strictly prohibited
without prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
TCR-AP subscription rate is US$625 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance
thereof are US$25 each. For subscription information, contact
Peter Chapman at 240/629-3300.
*** End of Transmission ***