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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, May 22, 2013, Vol. 16, No. 100
Headlines
A U S T R A L I A
BARMINCO HOLDINGS: Moody's Assigns Definitive B1 CFR
DUDLEY PARK: Clifton Hall Appointed as Receivers
LISA HO: Faces Creditors Following Administration
MONTENA PTY: Clifton Hall Appointed as Liquidators
SPRING GULLY: CEO Confident About Recovery Amid Strong Support
C H I N A
CHINA NATURAL: Reports $4.6 Million Net Income in First Quarter
FANTASIA HOLDINGS: Moody's Assigns B2 Rating to New RMB Sr. Notes
FANTASIA HOLDINGS: S&P Rates Chinese RMB Denominated Notes 'B+'
POWERLONG REAL: RMB Notes Issuance No Impact on B3 CFR
POWERLONG REAL: S&P Assigns 'B-' Rating to Chinese RMB Notes
SHANGHAI INDUSTRIAL: No Change on B1 CFR Following Land Swap
YANZHOU COAL: Hybrid Securities Get Moody's (P)Ba2 Rating
I N D I A
EXPAT ENGINEERING: CARE Rates INR9.60cr LT Bank Loan 'B+'
KINGFISHER AIRLINES: EVP Hitesh Patel Leaves Post
NAG LEATHERS: CARE Assigns 'D' Ratings to INR11cr Loans
NAG YANG: CARE Assigns 'D' Ratings to INR20cr Loans
OMID ENGINEERING: CARE Rates INR13cr LT Loan at 'CARE BB-'
PANCHDEEP CONSTRUCTIONS: CARE Rates INR10cr LT Loan at 'BB-'
PAVATHAL SPINNING: CARE Rates INR8.35cr LT Loan at 'CARE BB-'
PRADEEP MINING: CARE Rates INR6cr Long-Term Loan at 'CARE BB-'
RAJSHILA SYNTHETICS: CARE Rates INR1.20cr Loan at 'CARE BB'
SHREE CHAKRA: CARE Assigns 'D' Ratings to INR18.69cr Loans
J A P A N
ORSO FUNDING 7: S&P Lowers Rating on 2 Classes of Notes to CCC-
N E W Z E A L A N D
SOLID ENERGY: Future Appears Bleak, Kordamentha Report Shows
P H I L I P P I N E S
FIRST COUNTRY: PDIC Files Criminal Raps vs. Ex-Bank President
V I E T N A M
VIETNAM BANK: Moody's Affirms B3 Foreign Currency Deposit Ratings
X X X X X X X X
* Upcoming Meetings, Conferences and Seminars
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A U S T R A L I A
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BARMINCO HOLDINGS: Moody's Assigns Definitive B1 CFR
----------------------------------------------------
Moody's Investors Service assigned a definitive B1 corporate
family rating to Barminco Holdings Pty Limited, a privately owned
mining services contractor based in Western Australia.
At the same time, Moody's has also assigned a definitive B1 rating
to the $485 million of 5 year Senior Unsecured Notes due 2018 and
definitive Ba3 rating to a AUD100 million 3 year senior secured
credit facility due 2016, both entered into by Barminco Finance
Pty Limited, a wholly owned and guaranteed financing subsidiary of
Barminco.
The debt rated is:
$485 million 9.000% Senior Unsecured Notes due 01 June 2018
AUD100 million Senior Secured Credit Facility due May 2016
The net proceeds of the transactions will be used to refinance
existing debt, working capital requirements and general corporate
purposes.
The definitive CFR and long-term ratings follow the provisional
ratings assigned on 06 May 2013.
Ratings Rationale:
"Barminco's B1 corporate family rating primarily reflects the
company's high financial leverage and exposure to the cyclical and
volatile minerals industry, which is currently facing significant
headwinds" says Matthew Moore, a Moody's Assistant Vice President
-- Analyst, adding, "the rating also reflects Barminco's moderate
scale and concentrated revenue base, the capital intensive
industry in which it operates and the need to continually replace
and renew its contracts to sustain and grow revenues".
"The rating is balanced by Barminco's strong franchise and market
position in the underground hard rock mining segment in Australia,
its established relationships and contracted, albeit short term,
revenue with high quality customers and mines, and its variable
cost structure and flexibility around capital expenditures" says
Moore. The rating is further supported by the expected solid
liquidity following the proposed transaction.
The rating for the senior unsecured notes is the same as the
corporate family rating, reflecting the low level of secured debt
relative to assets ranking ahead of the notes in the capital
structure and Moody's expectation the AUD100 million senior
secured revolving credit facility will remain undrawn over the
forecast period.
The senior secured revolving credit facility is rated one notch
above the corporate family rating reflecting its priority position
in the capital structure and solid asset coverage.
The rating outlook is stable reflecting Moody's expectation that
Barminco will continue to perform under its contracts, which
combined with the generally low cost operations and high credit
quality of its customers should support a solid baseline of
revenues even under the current softer macro-economic conditions,
says Moore.
A rating upgrade or positive outlook could be considered if
Barminco is able to successfully achieve its growth plans - which
would strengthen scale and diversity - while improving credit
metrics to levels more appropriate for higher ratings.
Specifically, Moody's would expect the key credit metrics
(inclusive of AUMS and partial debt treatment of the RPS) of debt-
to-EBITDA and EBITDA-to-interest to be sustained below 3.0x and
above 3.5x, respectively.
The ratings could be downgraded if a deteriorating macro
environment, operating underperformance, or competitive pressures
leads to a material amount of Barminco's contracts being
terminated or not renewed on similar terms, thus reducing revenue
and cash flow generation. Ratings could also be downgraded if
Barminco's cushion within in its covenants deteriorates beyond
acceptable levels or the company makes any material acquisitions
which increase leverage.
Specifically, ratings would likely be downgraded if reductions in
revenue and cash flow caused Barminco's credit metrics (inclusive
of AUMS and partial debt treatment of the RPS) of Debt-to-EBITDA
and/or EBITDA-to-interest to be sustained above 5.00 to 5.25x or
below 2.0x to 2.5x, respectively.
The principal methodology used in these ratings was the Global
Business & Consumer Service Industry Rating Methodology published
in October 2010.
Barminco Finance Pty Limited is the financing vehicle for the
Western Australia based Barminco Holdings Pty Ltd and its
operating subsidiaries (collectively 'Barminco'). Barminco is a
market leader in underground hard rock contract mining in
Australia. In addition, Barminco provides diamond drilling,
crushing and screening and support services to its mining
customers. Barminco's core underground mining division provides
plant, personnel and technical expertise to assist mining
companies with both mine development and production, primarily in
gold, copper, zinc and nickel operations.
Barminco also has material operations across Africa, both directly
and through its 50% interest in the African Underground Mining
Services Joint Venture (AUMS JV) with Ausdrill. The joint venture,
which was established in 2007, currently has underground contract
mining operations in Ghana and Mali.
DUDLEY PARK: Clifton Hall Appointed as Receivers
------------------------------------------------
Timothy Clifton -- tclifton@cliftonhall.net.au -- and Mark Hall
-- mhall@cliftonhall.net.au -- of Clifton Hall were appointed as
Joint and Several Receivers in respect of Dudley Park Properties
A.S. Pty Ltd on May 15, 2013.
LISA HO: Faces Creditors Following Administration
-------------------------------------------------
Mercedes Ruehl at BRW reports that Lisa Ho had her date with the
creditors on Monday after her 30-year old retail company fell into
liquidation on May 8. Both groups, Lisa Ho Designs and Lisa Ho
Retail went into voluntary administration.
It happened less than a month after the high-end fashion retailer
flagged plans to list on the Australian Securities Exchange, the
report says.
But following the creditors meeting, HLB Mann Judd administrator
Barry Taylor said poor management and operational decisions and
not just a bad retail environment contributed to the retailer's
roughly AUD11 million debt, according to BRW.
BRW relates that while he agrees the retailer is battling tough
market conditions, Mr. Taylor reportedly told The Australian that
operational decisions "impacted on its viability and cashflow." He
adds there were "funds that (that have) not been properly
accounted for."
Mr. Taylor is also reported as saying the IPO was "misguided" and
that there were "queries around the accuracy of the financial
information that was being produced for management."
Mr. Taylor told BRW earlier in May he hoped to "get a lot of
interest from buyers." The expressions of interest campaign for
the business and its assets are still going.
Administrators HLB Mann Judd were appointed as administrators to
iconic Australian fashion brand Lisa Ho earlier this month.
SmartCompany said Lisa Ho recorded AUD13.05 million in revenue in
2012 but made a loss of AUD2.3 million, which the business
attributed to "one-off issues". This led to the appointment of
administrators to Lisa Ho Designs and Lisa Ho Retail.
The Lisa Ho chain comprises 10 flagship stores in Australia, two
clearance stores and an online store.
MONTENA PTY: Clifton Hall Appointed as Liquidators
--------------------------------------------------
Mark Hall and Timothy Clifton of Clifton Hall were appointed as
Joint and Several Liquidators of Montena Pty Ltd on May 14, 2013.
A meeting of creditors will be held at 9:30 a.m., on May 24, 2013,
in the offices of Clifton Hall, Level 1, 12 Gilles Street, in
Adelaide.
SPRING GULLY: CEO Confident About Recovery Amid Strong Support
--------------------------------------------------------------
Nigel Austin at The Advertiser reports that Spring Gully Foods
chief executive Kevin Webb is confident the family business will
be saved after strong support from consumers, retailers and
suppliers in the five weeks since it entered voluntary
administration.
The Advertiser relates that unprecedented sales -- helped by
strong consumer support, extra sales to retailers such as Aldi and
the Foodland/IGA group, and marketing changes -- have put it on
track to become a larger company than ever.
"We have settled into a higher-than-normal level of sales that has
put them where they need to be and given everyone confidence in
the future," the report quotes Mr. Webb as saying. "But the final
key to saving Spring Gully will be the addition of new investors."
According to the report, administrator Austin Taylor, of Meertens
Chartered Accountants, said he was encouraged by the strong
outlook for the business.
The Advertiser says the second creditors meeting has been
adjourned from May 17 until June to give Spring Gully time to
reorganise the business.
"The projections they have been producing based on the
improvements in the business have shown that it is looking much
better," The Advertiser quotes Mr. Taylor as saying.
He said a combination of factors are responsible, including a
sustained increase in sales, additional sales to companies such as
Aldi, and changes in the marketing.
Mr. Taylor said that he had found nothing untoward in the company
finances and was hopeful about the outcome for creditors because
Spring Gully was working on an offer of paying 100 cents in the
dollar to everyone, the report relates.
Spring Gully Foods is one of South Australia's iconic food
businesses. The company specialises in jams, chutneys, pickles,
sauces and honey.
The fourth generation Spring Gully Foods went into voluntary
administration April 11 with debts of more than AUD3 million.
According to ABC Rural, managing director Kevin Webb said its
financial losses are due to a dramatic fall in retail sales.
=========
C H I N A
=========
CHINA NATURAL: Reports $4.6 Million Net Income in First Quarter
---------------------------------------------------------------
China Natural Gas, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
net income of $4.66 million on $35.49 million of revenue for the
three months ended March 31, 2013, as compared with net income of
$1.94 million on $32.27 million of revenue for the same period
during the prior year.
The Company's balance sheet at March 31, 2013, showed $293.53
million in total assets, $83.18 million in total liabilities and
$210.35 million in total stockholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/meGB9X
Headquartered in Xi'an, Shaanxi Province, P.R.C., China Natural
Gas, Inc., was incorporated in the State of Delaware on March 31,
1999. The Company through its wholly owned subsidiaries and
variable interest entity, Xi'an Xilan Natural Gas Co., Ltd., and
subsidiaries of its VIE, which are located in Hong Kong, Shaanxi
Province, Henan Province and Hubei Province in the People's
Republic of China ("PRC"), engages in sales and distribution of
natural gas and gasoline to commercial, industrial and residential
customers through fueling stations and pipelines, construction of
pipeline networks, installation of natural gas fittings and parts
for end-users, and conversions of gasoline-fueled vehicles to
hybrid (natural gas/gasoline) powered vehicles at 0ptmobile
conversion sites.
On Feb. 8, 2013, an involuntary petition for bankruptcy was filed
against the Company by three of the Company's creditors, Abax
Lotus Ltd., Abax Nai Xin A Ltd., and Lake Street Fund LP (Bankr.
S.D.N.Y. Case No. 13-10419). The Petitioners claimed that they
have debts totaling $42,218,956.88 as a result of the Company's
failure to make payments on the 5% Guaranteed Senior Notes issued
in 2008. The Company says it intends to oppose the motion.
Adam P. Strochak, Esq., at Weil, Gotshal & Manges, LLP, in
Washington, D.C., represents the Petitioners as counsel.
FANTASIA HOLDINGS: Moody's Assigns B2 Rating to New RMB Sr. Notes
-----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to the RMB senior
unsecured notes proposed by Fantasia Holdings Group Company
Limited. At the same time, Moody's has affirmed Fantasia's B1
corporate family rating and B2 senior unsecured debt rating.
The ratings outlook is stable.
The proceeds from the RMB notes issuance will be used to refinance
some of the company's existing indebtedness, fund property
development and for general corporate purposes.
Ratings Rationale:
"The issuance of the RMB notes will strengthen Fantasia's
liquidity position and extend its debt maturity profile," says
Jiming Zou, a Moody's Analyst.
The new RMB notes will fund Fantasia's sales growth of more than
30% in 2013 and land payments.
In the first four months in 2013, the company recorded a 37% year-
on-year growth in contract sales to RMB2.44 billion.
Fantasia has resumed land acquisitions since 2H 2012. Its newly
acquired land lots are in Shanghai, Suzhou, Shenzhen, Beijing,
Chengdu, Dongguan and Singapore. Moody's estimates that full-year
land payments for 2013 could amount to RMB3.5 -- 4.0 billion.
The company has already settled part of its total RMB3.1 billion
in land premiums through the proceeds of the $500 million in notes
issued in January 2013 and September 2012.
"Given the current competitive pricing environment for RMB notes,
Fantasia is also expected to improve its overall borrowing costs
as the outstanding US dollar bonds were borrowed at higher costs
some 2 years ago," says Zou.
"The increase in debt from the new RMB notes issuance will not
pressure its ratings," adds Zou.
Moody's expects the new RMB notes will bring the company's
adjusted debt/capitalization ratio to 55-60% and EBITDA/interest
expense coverage to 2.5-3.0x, which are still acceptable for the
B1 corporate family rating.
Fantasia's B1 corporate family rating continues to reflect its
established niche business model, which balances the development
of commercial and residential properties. This strategy partly
mitigates the short-term impact on its performance of regulatory
measures for the residential sector in China.
Its rating also factors in its stable operating and financial
profile and disciplined approach to financial management. It has
an established track record in Shenzhen and Chengdu, and has
started expanding into other regions.
However, the rating is constrained by geographic concentration
risk and the execution risk associated with the company's
expansion into new locations. The scales of its operations, land
bank and financial leverage are consistent with its single-B rated
peers.
The stable outlook reflects Moody's expectations of continued
stability in Fantasia's financial profile, adequate liquidity, and
measured expansion strategy.
Upward pressure on its ratings could emerge if Fantasia can (1)
broaden its asset base and geographic footprint with
diversification apparent in contract sales; (2) consistently
achieve its sales targets; (3) maintain strong financial
discipline, while implementing its growth strategy; and 4)
maintain sound liquidity.
Moody's sees EBITDA/interest coverage consistently above 3x and
adjusted debt/capitalization below 50% as indications for a
potential rating upgrade.
The ratings could be downgraded if (1) Fantasia's sales were to
fall significantly short of Moody's expectations; (2) the company
were to pursue aggressive land acquisitions, or expansion
activities that pressure its liquidity; or (3) it failed to
maintain a disciplined approach to financial management.
Adjusted debt/capitalization consistently above 55-60% and
EBITDA/interest coverage below 2-2.5x would indicate a potential
rating downgrade.
The principal methodology used in this rating was the Global
Homebuilding Industry methodology published in March 2009.
Fantasia Holdings Group Co., Limited, is a property developer
established in 1996. It listed on the Hong Kong Stock Exchange in
November 2009. As of December 31, 2012, it had a land bank of
11.71 million square meters of gross floor area (including land
bank under framework agreement), mainly in Chengdu and the Pearl
River Delta. It develops high-end office buildings and luxury
residential properties, targeting small- and medium-sized
enterprises (SMEs) and affluent individuals.
FANTASIA HOLDINGS: S&P Rates Chinese RMB Denominated Notes 'B+'
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' issue rating
and its 'cnBB' Greater China regional scale rating to a proposed
issue of Chinese renminbi-denominated senior unsecured notes by
Fantasia Holdings Group Co. Ltd. (BB-/Stable/--; cnBB+/--).
Fantasia will use the proceeds to refinance its existing debt,
finance its existing and new projects, and for general corporate
purposes. The rating on the notes is subject to S&P's review of
the final issuance documentation.
The issue rating on Fantasia's proposed notes is one notch lower
than the corporate credit rating to reflect S&P's opinion that
offshore noteholders would be materially disadvantaged, compared
with onshore creditors, in the event of default. In S&P's view,
the company's ratio of priority borrowings to total assets will
remain above S&P's notching threshold of 15% for speculative-grade
debt.
The rating on Fantasia reflects the company's execution risk as it
expands into new markets, its increased appetite for debt-funded
expansion, and smaller business scale than peers'. Fantasia's
somewhat diversified product mix, low-cost land reserves, and
established market position in Chengdu temper the weaknesses.
The stable rating outlook on Fantasia reflects S&P's expectation
that the company will improve its property sales and maintain
stable profit margins to offset increased borrowing. S&P also
anticipates that the company can maintain "adequate" liquidity, as
S&P's criteria define the term, while pursuing growth.
POWERLONG REAL: RMB Notes Issuance No Impact on B3 CFR
------------------------------------------------------
Moody's Investors Services says Powerlong Real Estate Holdings
Limited's B3 corporate family and Caa1 senior unsecured rating
remain unaffected by the company's proposed RMB notes issuance.
The ratings outlook is positive.
"The notes issuance will help Powerlong improve its liquidity and
extend its debt maturity profile, which is particularly important
to supporting the company's development of an investment property
portfolio that demands long-term capital," says Jiming Zou, a
Moody's analyst.
"With increased funding from this latest note issue, Powerlong can
achieve revenue and profit growth in 2013 as it can complete more
project deliveries, " says Zou, also the lead analyst for
Powerlong.
According to its management, the company has 3.15 million square
meters GFA (Gross Floor Area) under construction and it targets to
open three commercial complexes by end- 2013. The proceeds from
the RMB notes is for refinancing the existing indebtedness. The
impact of any incremental debt increase has already been
incorporated into the current ratings. Powerlong's debt leverage
continues to be high and its EBITDA to interest expense ratio of
1.6x as of 2012 positions the company at the lower end of the B
category.
The positive rating outlook continues to reflect Moody's
expectation that Powerlong can execute substantially on its
business plan, thereby improving contract sales and raising rental
income.
Powerlong's business performance continued a positive trend in
early 2013 as seen by the 21.2% year-over-year growth in contract
sales for January-April. An increasing number of projects
available for sale and a stronger focus on sales execution -- amid
an improved market environment -- support its sales performance.
Moody's expects management to remain cautious over land
acquisitions in 2013. Since 2012, the company has slowed its
business expansion with currently little land acquisition premium
outstanding. As indicated by Powerlong, it is switching its
business focus, from expanding its operating scale to improving
the quality and economic benefits it reaps.
The company's B3 corporate family rating is supported by: a) its
track record in developing and selling integrated retail and
residential complexes in lower-tier cities in China, b) its
ability to attract strong domestic and international anchor
tenants to its growing investment properties, thereby providing
recurring income, and c) its growing number of development
projects which will contribute to future cash-flow
diversification.
The B3 rating also reflects Powerlong's (1) sales volatility, (2)
execution and funding risks associated with fast expansion, and
(3) weak credit metrics and limited financial flexibility.
The principal methodology used in this rating was Global
Homebuilding Industry Methodology published in March 2009.
Powerlong Real Estate Holdings Limited is a Chinese developer
focused on building large-scale integrated residential and
commercial properties in second- and third-tier cities in China.
As of December 30, 2012, it had a development land bank of around
7.8 million sqm in gross floor area (GFA) in nine provinces, and
had 13 completed investment properties.
The company listed on the Hong Kong Exchange in October 2009. At
end-2012, the Hoi family, the founders, had an aggregate stake of
67.7% in the company.
POWERLONG REAL: S&P Assigns 'B-' Rating to Chinese RMB Notes
------------------------------------------------------------
Standard & Poor's Ratings Services assigned its unsolicited 'B-'
long-term issue rating and unsolicited 'cnB+' long-term Greater
China regional scale rating to a proposed issue of Chinese
renminbi-denominated senior unsecured notes by Powerlong Real
Estate Holdings Ltd. (B/Stable/--; cnBB-/--). The China-based
developer intends to use the proceeds mainly to refinance its
existing debts. The rating on the notes is subject to S&P's
review of the final issuance documentation.
The issue rating is one notch lower than the long-term corporate
credit rating on Powerlong to reflect S&P's opinion that offshore
noteholders would be materially disadvantaged, compared with
onshore creditors, in the event of default. S&P anticipates that
the company's ratio of priority debt to total assets will remain
above S&P's notching threshold of 15% for speculative-grade debt.
The stable outlook reflects S&P's view that Powerlong will
generate satisfactory property sales and profitability in the next
12 months, given S&P's expectation for a stable property market.
S&P also expects the company to reduce its investment appetite and
to prepare over the next 12 months for the refinancing of its
offshore bonds due 2014.
SHANGHAI INDUSTRIAL: No Change on B1 CFR Following Land Swap
------------------------------------------------------------
Moody's Investors Service says that Shanghai Industrial Urban
Development Group Limited's land swap with the Shanghai government
is credit positive but has no impact on its B1 corporate family
rating and B2 senior unsecured rating or the stable outlook.
"SIUD will have better control over the new site it is receiving
in Binjiang - an area which is commercially important for Shanghai
and where the local government seeking to establish a new
cultural, arts and exhibition center," says Franco Leung, a
Moody's Assistant Vice President and Analyst.
SIUD announced on May 19, 2013 that it had agreed with the
Shanghai Xuhui District Government to swap SIUD's land parcel in
Xujiahui in Xuhui District for four parcels in Binjiang, also in
Shanghai.
The transaction only involves changes in ownership and does not
involve any cash.
The Xujiahui site of 35,343 sqm was valued at RMB4,245 million as
of July 31, 2011, or about 13% of SIUD's 2011 year-end total
inventory value. SIUD purchased it on November 2011 and planned to
develop the site into mixed-use commercial complex.
However, due to changes in town planning, SIUD had not commenced
any development, thereby lengthening its asset turnover cycle.
Besides, there were uncertainties over when the development could
be started going forward as SIUD owned the land plot in Xujiahui
only -- the only one land plot out of a total of six parcels of
land in a project that is under the local government's town
planning.
By contrast, the new site in Binjiang is of 83,220 sqm and SIUD
has the full control of the site to develop it into mixed-use
commercial properties.
Moody's does not expect the booking of loss as a result of the
land swap because, based on the preliminary valuation by
independent valuer, the new site in Binjiang is of higher value
than the Xujiahui land plot.
The principal methodology used in this rating was the Global
Homebuilding Industry Methodology published in March 2009.
Shanghai Industrial Urban Development Group Limited is a Chinese
property developer engaged in residential and mixed-use
developments. SIUD has 24 projects across 12 cities in China and a
land bank of 9 million sqm in aggregate, after it acquired
Shanghai Urban Development (unrated) from its parent, Shanghai
Industrial Holdings Limited (SIH, unrated) in 2011. SIH has a 70%
stake in SIUD. The parent company manages three core businesses in
real estate, infrastructure (toll roads and water services), and
consumer products (tobacco and printing).
YANZHOU COAL: Hybrid Securities Get Moody's (P)Ba2 Rating
---------------------------------------------------------
Moody's Investors Service assigned a provisional (P)Ba2 rating to
the subordinated guaranteed perpetual capital securities to be
issued by Yanzhou Coal International Trading Co Ltd and guaranteed
by Yanzhou Coal Mining Co Ltd.
At the same time, Moody's has affirmed Yanzhou Coal's Baa3 issuer
rating and the Baa3 rating of the bonds issued by Yancoal
International Resources Development Co Ltd and guaranteed by
Yanzhou Coal.
The ratings outlook is negative.
The proceeds from the hybrid securities will be used for debt
repayment and general corporate purposes.
The provisional status of the hybrid securities rating will be
removed upon completion of the issuance and all satisfactory terms
and conditions have been met.
Ratings Rationale:
"The hybrid securities will provide additional funding to Yanzhou
Coal for the purposes of managing its business in a down-cycle,"
says Alan Gao, a Moody's Vice President and Senior Analyst.
"As part of the proceeds of the hybrid securities will be used for
the refinancing of existing debt, there will be an improvement in
Yanzhou Coal's debt maturity profile and hence the issuance is
credit positive for its overall credit profile," adds Gao.
"While the hybrid securities will slightly raise debt leverage --
as measured by Debt/EBITDA -- the company's financial risk profile
will not materially change, given the partial equity treatment
applied to these securities," says Gao.
The (P)Ba2 rating assigned to Yanzhou Coal's proposed hybrid
securities is two notches below the company's senior unsecured
rating of Baa3. This rating differential reflects the deeply
subordinated nature of the hybrid securities as they rank behind
Yanzhou Coal's senior debt obligations in terms of the priority of
claims; and they provide Yanzhou Coal with the option to defer
coupons on a cumulative basis.
Yanzhou Coal's Baa3 rating reflects its quality operating coal
mines, leading market position in China, long operating track
record, and strong balance sheet liquidity, including RMB11.9
billion cash on hand as of March 2013.
Together with annual operating cash flow -- expected to exceed
RMB8 billion -- there will be sufficient internal cash sources to
cover its maturing debt, dividend payments, and committed capital
expenditure for the next 12 months.
The Baa3 rating also factors in Yanzhou Coal's status as a
provincial state-owned enterprise (SOE) in the strategic resources
sector under the Shandong provincial government. Given the
benefits of government ownership and supervision, Yanzhou Coal has
a robust ability to manage the incremental risks resulting from
its transition to a more diversified operation geographically.
Such benefits includes the ability to access low-cost domestic
funding, a factor which supports its credit profile.
On the other hand, Yanzhou Coal's credit strength is constrained
by the operational and financial challenges of integrating its
Australian operation, Gloucester Coal. It acquired the latter in
June 2012 when the coal industry was in a down-cycle.
Yanzhou Coal reported RMB29.86 billion in revenue in 2H 2012, 4%
higher than 1H 2012. But EBIT declined 66% to RMB1.53 billion.
Such a deterioration in profitability was due to an operating loss
in Australia and declining coal prices.
Yancoal Australia's 1Q 2013 performance stayed affected by (i) the
impact of adverse seasonal factors on coal production and sales;
and (ii) the fact that its cost structure was negatively impacted
by one-off issues, including production delays and adverse
weather.
Moody's believes coal prices will maintain their current levels in
2013 due to a weak global economy. Thus, Yanzhou Coal's annual
revenue is forecast to decline marginally from 2012, or by 3.5%,
to around RMB56 billion.
But EBIT could improve by around 15% to around RMB7 billion as
cost savings and curbs on capital expenditure are implemented.
Assuming that the company successfully implements its measures to
improve operations, Moody's expects debt leverage to improve, with
Debt/EBITDA at 3.0-3.5x in the next 12-18 months, down from 4.1x
in 2012.
The negative outlook reflects the weakening in Yanzhou Coal's
credit metrics as a result of the cost pressures related to its
newly acquired Australian operations and the challenging operating
environment for the coal industry.
Given the negative outlook, a rating upgrade in the near term is
unlikely. The rating outlook could return to stable if Yanzhou
Coal can improve its financial profile, such that adjusted
debt/EBITDA trends below 3.0x, and (cash flow from operation --
dividends)/debt trends above 20%.
Downward rating pressure could occur if (1) Yanzhou Coal
experiences material disruptions in its operations; (2) its
expansion accelerates, such that debt leverage and liquidity come
under pressure; (3) it fails to comply with regulations, resulting
in a material suspension of operations.
A downgrade could be triggered by a material decline in balance-
sheet liquidity, or if Yanzhou Coal's credit metrics deteriorate,
such that adjusted debt/EBITDA exceeds 3.0x, (cash flow from
operations - dividends)/debt falls below 20%, and the company
consistently generates material negative free cash flow.
If the Shandong provincial government's indirect ownership --
through the Yankuang Group -- drops to below 50%, Moody's would
consider this as evidence that the company's relationship with the
provincial government is weakening. Such a development could
trigger a review for downgrade.
The principal methodology used in these ratings was Global Mining
Industry Methodology published in May 2009.
Yanzhou Coal is a leading coal mining company in China with mines
in China and Australia. In June 2012, its subsidiary Yancoal
Australia completed the acquisition of Gloucester Coal and listed
on the Australian Securities Exchange.
Yanzhou Coal listed in Shanghai, Hong Kong and New York in 1998.
It is 53%-owned by the Yankuang Group, a state-owned enterprise
wholly owned by the Shandong Provincial State-Owned Assets
Supervision and Administration Commission, and is one of the top
coal mining groups in China.
=========
I N D I A
=========
EXPAT ENGINEERING: CARE Rates INR9.60cr LT Bank Loan 'B+'
---------------------------------------------------------
CARE assigns 'CARE B+' and 'CARE A4' ratings to the bank
facilities of Expat Engineering India Limited.
Amount
Facilities (INR crore) Ratings
----------- ----------- -------
Long-term Bank Facilities 9.60 CARE B+ Assigned
Short-term Bank Facilities 1.0 CARE A4 Assigned
Rating Rationale
The ratings assigned to the bank facilities of Expat Engineering
India Limited are constrained by the implementation risk
associated with its debt-funded project, delay in project
execution due to delay in regulatory approvals and risk inherent
to the real estate sector with competition from other
real estate players. The ratings, however, derive strength from
the experience of the promoters in the real estate industry,
moderate order book showing the revenue visibility for the next
two years, increase in operating income over the last three years,
and comfortable capital structure.
The ability of EEIL to complete the project within envisaged cost
and time in light of competition is the key rating sensitivity.
Incorporated in 1999, the Expat Properties India Limited, part of
the Expat Group, was setup to develop a project belonging to the
Expat Group. Later in the year 2007, this division emerged as a
new entity of the Expat group under the name of Expat Engineering
India Limited in Bangalore. This restructuring was done in order
to expand the operations to construction of residential buildings
other than the group projects. EEIL, promoted by Mr Santosh
Balakrishna Shetty, Santosh Bothello and several others, is
engaged in executing contracts for land & infrastructure
development and construction of residential & commercial buildings
for projects belonging to the Expat group as well as others. In
2010, EEIL entered into a strategic alliance with a US-based firm,
TMAD-Taylor & Gaines, in order to execute the international
projects. However, no international project has been executed till
now. EEIL is currently executing four projects, which are expected
to be completed by the end of 2013. The projects belonging to the
Expat group are allotted to EEIL on part basis and once a part of
work order is finished, next work order is issued.
During FY12 (refers to the period April 1 to March 31), EEIL
reported a total operating income of INR26.90 crore and a PAT of
INR0.36 crore.
KINGFISHER AIRLINES: EVP Hitesh Patel Leaves Post
-------------------------------------------------
The Times of India reports that Kingfisher Airlines executive
vice-president Hitesh Patel has put in his papers. Mr. Patel
joined KFA promoter Vijay Mallya nine years ago and was
instrumental in the airline's launch in 2005. He was also active
in meetings with the directorate general of civil aviation (DGCA)
and talking to prospective investors after airline was grounded
last October.
"Hitesh Patel is returning home to New York and will take a much-
needed break before resuming work elsewhere. It was not easy
facing the ire of employees and scores of other agencies, who have
not been paid for months," sources said.
It is learnt that Mr. Patel stuck to the airline when the
management was talking to investors but when nothing seemed to
materialize, he decided to call it a day, TOI relates.
About Kingfisher Airlines
Headquartered in Mumbai, India, Kingfisher Airlines --
http://www.flykingfisher.com/-- formerly known as Deccan
Aviation Ltd., served about 35 domestic destinations with a fleet
of more than 40 aircraft, including Airbus jets and ATR 72
turboprops. It maintained bases in major cities such as Delhi and
Mumbai.
Kingfisher Airlines, which has been unprofitable since it was
created in 2005, accumulated losses of $1.9 billion between
May 2005 and June 30, 2012, The Wall Street Journal reported
citing Sydney-based consultant CAPA-Centre for Aviation. The
airline also owes about $2.5 billion to lenders, suppliers,
leasing companies and investors, the Journal added.
According to The Times of India, the company began showing signs
of weakness in November 2011 when it ran out of money to operate
most of its flights and started reducing its flights to cut cost.
The airline also failed to pay salaries to its employees for a
long time following which the employees went on an indefinite
strike. Its flying license was finally suspended in October 2012,
TOI reported.
NAG LEATHERS: CARE Assigns 'D' Ratings to INR11cr Loans
-------------------------------------------------------
CARE assigns 'CARE D' rating to the bank facilities of NAG
Leathers Private Limited.
Amount
Facilities (INR crore) Ratings
----------- ----------- -------
Long-term Bank Facilities 6 CARE D Assigned
Short-term Bank Facilities 5 CARE D Assigned
Rating Rationale
The ratings assigned to the bank facilities of Nag leathers
Private Limited are constrained by regular overdrawal and ongoing
delays in the interest servicing by the company on its working
capital facilities on account of stressed liquidity position
primarily driven by high amount of funds blocked in the inventory.
Nag Leathers Private Limited is a part of the Nag Group, promoted
by Mr B. Subramania Pillay (Managing Director) and Mr K.
Shanmugathammal (Director) in the year 1990 and later in
2003 C. Jagadeesh joined as a Director of the company. NLPL has
three group entities: Nag Yang Shoes Private Limited, Nag India
Private Limited and Sri Durga Leathers, which are into
manufacturing of leather shoes. The group also runs a trust by the
name of Sri Vinayaka Selva Charitable Trust, which is engaged in
social services. NLPL is engaged in the manufacturing of
finished leather and shoe uppers. The total raw material is
procured from local suppliers and major raw material, being raw
hide leather, is converted to finished leather and semi-finished
leather as per the requirement, the company's sales include both
domestic and export-oriented sales.
During FY12 (refers to the period April 1 to March 31), NLPL
reported a total operating income of INR28.93 crore and a PAT of
INR0.09 crore.
NAG YANG: CARE Assigns 'D' Ratings to INR20cr Loans
---------------------------------------------------
CARE assigns 'CARE D' rating to the bank facilities of Nag Yang
Shoes Private Limited.
Amount
Facilities (INR crore) Ratings
----------- ----------- -------
Long-term Bank Facilities 12 CARE D Assigned
Short-term Bank Facilities 8 CARE D Assigned
Rating Rationale
The ratings assigned to the bank facilities of Nag Yang Shoes
Private Limited are constrained by regular overdrawals and ongoing
delays in the interest servicing by the company on
its working capital limits on account of the stressed liquidity
position primarily driven by high amount of funds blocked in the
inventory.
Nag Yang Shoes Private Limited is a part of the Nag group
incorporated in 2003 by S. C. Pillay, Mr K. Shanmugathammal and C.
Jagadeesh. NYSPL started its commercial operations from May 2003
by executing job work for other factories and commenced
manufacturing and exporting of leather shoes and shoe uppers from
the month of August 2011. The company is engaged in the
manufacturing of shoes/footwear & shoe uppers which is majorly
exported and which constituted of approximately 95% of the total
revenue during FY12 (refers to the period April 1 to March 31) to
European countries viz Germany, UK and France. The company has an
overall manufacturing capacity to produce 3,000 pair of shoes per
day at its manufacturing facility located at Katpadi Taluk,
Vellore, Tamil Nadu. NYSPL is an ISO-9001:2000 certified company
and is also a recognized export house by Government of India.
The company manufactures its products against the orders received
and its products are being retailed by reputed international
clientele like M/s. Wortnal (Germany), M/s. Shoes. Com (Germany)
and Marc Shoes (Germany) among others. NYSPL purchases 100% of its
raw material i.e., semifinished leather and finished leather from
Nag Leathers Private Limited, the group company of Nag.
During FY12, NYSPL reported a total operating income of INR40.33
crore and a PAT of INR0.09 crore.
OMID ENGINEERING: CARE Rates INR13cr LT Loan at 'CARE BB-'
----------------------------------------------------------
CARE assigns 'CARE BB-' rating to the bank facilities of
Omid Engineering Pvt. Ltd.
Amount
Facilities (INR crore) Ratings
----------- ----------- -------
Long-term Bank Facilities 13 CARE BB- Assigned
Rating Rationale
The rating assigned to the bank facilities of OMID Engineering
Pvt. Ltd. are constrained by its small scale of operation with low
net profit margins, customer concentration risk, susceptibility to
fluctuation in the raw material prices, exposure to group
companies, working-capital intensive nature of operations and
intense competition in the industry. The aforesaid constraints are
partially offset by the experienced promoters with long track
record of operation, established client profile and satisfactory
demand outlook of the industry.
The ability of OEPL to improve its scale of operations along with
profitability margins and efficient management of working capital
are the key rating sensitivities.
OMID Engineering Pvt. Ltd., incorporated in October 1983, belongs
to the Him Group of Companies of New Delhi and is engaged in the
manufacturing of LPG Cylinders. After incorporation, the company
initially was engaged in the job work to paint the cylinders
manufactured by its sister concern, Him Cylinders Ltd.
Subsequently, in July 2001, the company installed a manufacturing
facility for manufacturing of LPG Cylinder in Una district of
Himachal Pradesh. OEPL, having installed capacity of five lakh
units per annum, sells its entire output to the public sector oil
marketing companies (OMCs) according to their specifications. This
apart, the company also sells the scrap generated from the
manufacturing process.
The Him group, promoted by Mr Ashok Prakash Raja is into the
manufacturing of LPG cylinders & related products like valves,
regulator, alloys, manufacturing of steel ingots, real estate,
investment & lease finance business and dealership of commercial
vehicles. Over the years, the group gradually expanded its
capacities and diversified into different products.
The day-to-day affairs of the company are looked after by Mr Ashok
Prakash Raja, Managing Director, with adequate support from other
two directors, Mr Shanti Swarup Raja and Mr Lalit Bassi
along with a team of experienced personnel. During FY12 (refers
to the period April 1 to March 31), the company reported PBILDT of
INR2.7 crore (Rs.2.9 crore in FY11) and PAT of INR0.2 crore
(INR1.0 crore in FY11) on a total income of INR35.8 crore (INR43.1
crore in FY11). Furthermore, as per the management, the company
has achieved an operating income of INR41.75 crore in FY13
(provisional).
PANCHDEEP CONSTRUCTIONS: CARE Rates INR10cr LT Loan at 'BB-'
------------------------------------------------------------
CARE assigns 'CARE BB-' and 'CARE A4' ratings to the bank
facilities of Panchdeep Constructions Ltd.
Amount
Facilities (INR crore) Ratings
----------- ----------- -------
Long-term Bank Facilities 10 CARE BB- Assigned
Short-term Bank Facilities 5 CARE A4 Assigned
Rating Rationale
The ratings assigned to the bank facilities of Panchdeep
Constructions Ltd are primarily constrained by its tight liquidity
position coupled with small scale of operations, exposure to the
volatile input prices and its presence in a highly competitive and
fragmented construction industry. The ratings, however, favorably
take into account the longstanding experience of the promoters,
satisfactory order book position and its reputed clientele. Going
forward, the ability of PCL to consistently secure new orders and
timely execution of the same, containment of operating costs in
the wake of increasing competition and effective working capital
management will be the key rating sensitivities.
Panchdeep Constructions Ltd was incorporated in January 1987 as a
private limited company by Mr. Ram Ratan Chowdhary and Mr. Dilip
Kumar Chowdhary of Kolkata. In May 1993, PCPL was converted into a
public limited company. Since inception, the company is engaged in
civil construction activities providing different types of
construction services ranging from piling & foundation, water
drainage system, fire and safety design, piping isometric design,
quality control, etc to the construction of buildings, stadium,
hard stand and amusement park. The company has its registered
office at Howrah (West Bengal) and has three regional offices at
Jamshedpur (Jharkhand), Patna (Bihar) and Bhubaneswar (Orissa).
During FY12 (refers to the period April 1, 2011 to March 31,
2012), PCL reported a total operating income of INR25.1 crore and
a PAT of INR0.8 crore. Furthermore, in M11FY13 (provisional), the
company has reported a total operating income of INR21 crore.
PAVATHAL SPINNING: CARE Rates INR8.35cr LT Loan at 'CARE BB-'
-------------------------------------------------------------
CARE assigns 'CARE BB-' rating to the bank facilities of Pavathal
Spinning Mills Private Limited.
Amount
Facilities (INR crore) Ratings
----------- ----------- -------
Long-term Bank Facilities 8.35 CARE BB- Assigned
Rating Rationale
The rating assigned to Pavathal Spinning Mills Private Limited
(PSM) is constrained by its small scale of operations, relatively
weak financial risk profile marked by fluctuating revenues,
declining profitability, and modest leverage and coverage
indicators. The rating is further constrained by susceptibility of
margins to raw material price movements and intense competition in
a highly fragmented industry structure, which restricts pricing
flexibility. The rating, however, factors in the experience of the
promoters for more than three decades and the captive consumption
of power amidst the power shortages in Tamil Nadu and increasing
power cost.
Going forward, the ability of PSM to scale up the operations and
sustain its profit margins amidst the continuing unfavorable power
supply situation prevailing in the State of Tamil Nadu would be
the key rating sensitivity.
Pavathal Spinning Mills Private Limited (PSM) is engaged in the
production and sale of polyester yarn, viscose yarn and blended
yarn. PSM was established in 1982 as Palani Karthik Spinning Mills
Private Limited and was taken over by the present management
[consisting of Mr K.Rajavelu, V. Jayaraman, Mr N. Balakrishnan and
Mr P. Palanimuthu] in 1992. The erstwhile company was established
with an installed spinning capacity of 3,000 spindles. PSM has
expanded its operations over the last two decades and has a
spinning capacity of 14,112 spindles with windmill capacity of 2
MW, as on March 31, 2013. The company's manufacturing facility is
located in Dindigul, Tamil Nadu.
The company reported PAT of INR0.42 crore on an operating income
of INR22.97 crore during FY12 (refers to the period April 01 to
March 31), against PAT of INR1.32 crore on an operating income of
INR24.68 crore during FY11.
PRADEEP MINING: CARE Rates INR6cr Long-Term Loan at 'CARE BB-'
--------------------------------------------------------------
CARE assigns 'CARE BB-' rating to the bank facilities of Pradeep
Mining And Construction Pvt Ltd.
Amount
Facilities (INR crore) Ratings
----------- ----------- -------
Long-term Bank Facilities 6 CARE BB- Assigned
Rating Rationale
The rating assigned to the bank facilities of Pradeep Mining and
Construction Pvt Ltd is primarily constrained by its weak
financial risk profile marked by continuous decline in revenue,
erratic trend in profitability margins and elongated operating
cycle. The rating also factors in high customer & geographical
concentration risk and its presence in a highly competitive and
fragmented construction and mining industry.
The rating, however, derives strength from the experience of the
promoters in the mining business and its long track record of
operation.
PMCPL's ability to scale up its operation by securing new orders
and timely execution of the same, containment of operating costs
in the wake of increasing competition, and effective working
capital management will be the key rating sensitivities.
PMCPL incorporated in June 1996 as Pradeep Mining & Transport Pvt
Ltd by Bal Samant family of Cuttack, Bhubaneswar. Subsequently in
June 2001, it was rechristened to its present name. The company is
mainly engaged in chrome ore mining-related jobs encompassing
removal of overburden, sorting of rejects, grade-wise stacking,
lifting and transportation of the same. The company has a contract
with IDCOL Ferro Chrome and Alloys Limited, a Government-of-Orrisa
undertaking, for mining of chrome ore for a period of three years
(expiring in 2014) with further extension of two years based on
the performance.
As per the audited results for FY12 (refers to the period April 1
to March 31), PMCPL reported PBILDT and PAT of INR1.6 crore (Rs.2
crore in FY11) and INR0.3 crore (INR0.5 crore in FY11),
respectively, on total income of INR15 crore (INR15.7 crore in
FY11). As per the provisional results for M11FY13, PMCPL has
reported total operating income of INR16 crore.
RAJSHILA SYNTHETICS: CARE Rates INR1.20cr Loan at 'CARE BB'
-----------------------------------------------------------
CARE assigns 'CARE BB' and 'CARE A4+' ratings to the bank
facilities of Rajshila Synthetics Private Limited.
Amount
Facilities (INR crore) Ratings
----------- ----------- -------
Long-term Bank Facilities 1.20 CARE BB Assigned
Short-term Bank Facilities 15.00 CARE A4+ Assigned
Rating Rationale
The ratings assigned to the bank facilities of Rajshila Synthetics
Private Limited are primarily constrained by low profitability
margins, leveraged capital structure, exposure to the foreign
exchange fluctuation risk and presence in the highly competitive
industry. The ratings draw comfort from the experienced
promoters, association with reputed companies and diversified
customer base. The ratings further draw comfort from comfortable
operating cycle and moderate liquidity indicators. Going forward,
the ability of the company to increase the scale of operations
while improving its profitability margins and capital structure
and minimizing foreign exchange fluctuation risk would be the key
rating sensitivities.
New Delhi-based Rajshila Synthetics Private Limited (RSP)
incorporated in July 2009 is promoted by Mr. Amit Agarwal and his
father, Raj Kumar Agarwal. The company commenced its commercial
operation in 2010. RSP is engaged into the trading of various
grades of synthetic rubber, rubber chemicals, additives and
industrial raw material. It is the authorized distributor of these
products for various companies and deals in a various grades of
products manufactured in India and also imports from Japan, Korea,
US, China, Taiwan and other EU nations.
RSP sells its products directly to various companies located in
India and is engaged in the manufacturing of tyres, conveyers, v-
belts, hoses, cables, automotive components, footwear, etc.
For FY12 (refers to the period April 1 to March 31), RSP achieved
total operating income of INR96.62 crore with PBILDT and PAT of
INR2.83 crore and INR0.75 crore, respectively. Moreover, for
11MFY13 provisional results (refers to the period April 1 to
February 28), the company achieved a total operating income of
INR99.37 crore with PBILDT and PAT of INR1.77 crore and
INR1.01 crore, respectively.
SHREE CHAKRA: CARE Assigns 'D' Ratings to INR18.69cr Loans
----------------------------------------------------------
CARE assigns 'CARE D/CARE D' ratings to the bank facilities of
Shree Chakra Papers Pvt. Ltd.
Amount
Facilities (INR crore) Ratings
----------- ----------- -------
Long-term Bank Facilities 17.54 CARE D Assigned
Short-term Bank Facilities 1.15 CARE D Assigned
Rating Rationale
The ratings assigned to the bank facilities of Shree Chakra Papers
Pvt Ltd are constrained by the ongoing delays with respect to the
interest servicing on working capital borrowings due to cash flow
mismatches.
Shree Chakra Papers Pvt Ltd was incorporated in the year 2003 by
Mr. P. Kaleswara Rao (Managing Director). The company has set up a
paper manufacturing unit in G. Ragampeta, Peddapuram Mandal, East
Godavari District of Andhra Pradesh having an installed capacity
of 22,500 MTPA. SCPPL commenced commercial operations during FY08
(6 months). SCPPL is primarily engaged in manufacturing three
varieties of paper namely: News Print (NP), Writing & Printing
Paper (WPP) and surface-size Map Litho paper (MP) with NP
constituting majority of sales.
SCPPL has registered net sales of INR70 crore with PAT of INR1
crore for FY12 (refers to the period April 01 to March 31).
=========
J A P A N
=========
ORSO FUNDING 7: S&P Lowers Rating on 2 Classes of Notes to CCC-
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it has lowered its
ratings on the class C to E notes and affirmed its rating on the
class B notes issued under the Godo Kaisha Orso Funding CMBS 7
(Orso Funding CMBS 7) transaction in July 2007. The class A notes
fully redeemed on the payment date in May 2012. Meanwhile, S&P
withdrew its rating on the interest-only class X notes and lowered
to 'D (sf)' its rating on the class F notes on May 21, 2012.
The downgrades of classes C to E reflects S&P's downward revision
to its assumption for the likely collection amount from the
property--an office/retail/hotel complex in Chiba Prefecture--
backing one of the transaction's two remaining loans. The loan,
which defaulted in April 2012, originally represented about 19.5%
of the total initial issuance amount of the notes. Under S&P's
revised assumption, it currently assumes the value of the complex
to be about 11% of its initial underwriting value, whereas S&P's
estimates in May 2012--when it last reviewed the property's value-
-was about 30% of S&P's initial underwriting value. Indeed, S&P
assumes that the value of the complex will come under increased
pressure as the servicer works to sell the property before the
transaction's legal final maturity date, which is only about 12
months away.
Meanwhile, S&P affirmed its 'A (sf)' rating on class B because,
although it has lowered its assumption for the likely collection
amount from the above underlying property, S&P considers that
credit enhancement for this class has increased, reflecting
progress in the recovery of the other loans backing this
transaction.
Four loans and two TMK ("tokutei mokuteki kaisha"; special-purpose
company) bonds extended to or issued by six obligors initially
secured the floating-rate notes, and 42 real estate properties
originally backed the loans and the TMK bonds issued under this
commercial mortgage-backed securities (CMBS) transaction. Of the
four loans and two TMK bonds, only two loans remain. The two
remaining loans, which both defaulted, originally represented
about a combined 45% of the total initial issuance amount of the
notes.
Bear Stearns (Japan) Ltd. Tokyo Branch (currently, JPMorgan
Securities Japan Co. Ltd.) arranged this transaction, and Premier
Asset Management Co. acts as the servicer.
The ratings reflect S&P's opinion on the likelihood of the full
payment of interest and the ultimate repayment of principal by the
transaction's legal final maturity date in May 2014 for the class
B to E notes.
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
RATINGS LOWERED
Godo Kaisha Orso Funding CMBS 7
JPY50.3 billion floating-rate notes due May 2014
Class To From Initial issue amount
C B (sf) BB (sf) JPY5.4 bil.
D CCC- (sf) CCC (sf) JPY5.4 bil.
E CCC- (sf) CCC (sf) JPY5.9 bil.
RATING AFFIRMED
Godo Kaisha Orso Funding CMBS 7
Class Rating Initial issue amount
B A (sf) JPY5.4 bil.
====================
N E W Z E A L A N D
====================
SOLID ENERGY: Future Appears Bleak, Kordamentha Report Shows
------------------------------------------------------------
The New Zealand Herald reports that stricken state owned coal
miner Solid Energy's future appears bleak according to a recently
completed report on the company, Prime Minister John Key indicated
Monday.
According to the Herald, Mr. Key said corporate advisers
KordaMentha had just completed their report on the company which
is on the brink of collapse after being crippled by low coal
prices and almost NZ$400 million in debts.
"They would indicate that some parts of the business are in better
shape than others" the report quotes Mr. Key as saying. "So in
totality it's probably got no equity left and significant debts
but that doesn't mean there aren't some parts of it that are
potentially genuine businesses. The question is how the Government
can take the next step."
The Herald relates that Mr. Key said there were "many options on
the table".
"None of them are terribly palatable but we're doing our best to
try and resolve what is a quite broken company," Mr. Key, as cited
by Herald, said.
According to the report, Mr. Key expected State Owned Enterprises
Minister Tony Ryall and Finance Minister Bill English would have
"clarity" about the next steps within a month.
The indebted state-owned enterprise announced more than 100 job
cuts earlier this month and Mr. English said the Government was
prepared to let the company fail if it could not come up with a
viable turnaround plan.
Solid Energy New Zealand Ltd is New Zealand's largest coal mining
company and an investor in research and commercialisation of
sustainable forms of energy that use coal, coal seam gas, biomass,
biodiesel and solar. Solid Energy's core mining business
includes hard coking coal, primarily for export to steel mills
throughout Asia, and thermal coal for the Huntly power station
and other domestic customers in the steel, dairy and cement
industries.
=====================
P H I L I P P I N E S
=====================
FIRST COUNTRY: PDIC Files Criminal Raps vs. Ex-Bank President
-------------------------------------------------------------
The Philippine Deposit Insurance Corporation (PDIC) filed with the
Department of Justice on May 9, 2013, a criminal complaint against
the former President of the closed First Country Rural Bank, Inc.
(First Country Bank) for conducting business in an unsafe and
unsound manner, in violation of the PDIC Charter.
The PDIC's complaint alleged that Hans Paulo G. Bulos, former
President of First Country Bank, on various dates from December
2009 to May 2010, caused the creation of unrecorded back-to-back
loans aggregating P10 million with third party banks to help boost
the bank's capital level and settled these loans by withdrawing
from the deposit accounts of various depositors without their
consent.
A back-to-back loan transaction, according to the complaint,
required the deposit of First Country Bank with a third party bank
to be used as security for the loan it transacted with the latter.
The proceeds of the back-to-back loan were then used as additional
capital in the name of an individual or entity of First Country
Bank's choice. However, since the funds inflow was treated as
capital infusion, the back-to-back loan was not recorded as a loan
obligation in the books of First Country Bank. First Country Bank
settled and pre-terminated the back-to-back loans by withdrawing
from the long-term deposits of its clients without their consent.
Investigation showed that respondent Hans Paulo Bulos and his
father, Honorio C. Bulos, Jr., directed the former officers of
First Country Bank to obtain back-to-back loans from third party
banks to address the bank's capitalization problem. Honorio, who
died on February 22, 2011, was de facto owner of First Country
Bank. Investigation further showed that Hans Paulo Bulos likewise
instructed the non-recording of said transactions in the books of
First Country Bank.
The Monetary Board ordered the closure of First Country Bank on
December 9, 2010 and placed it under PDIC receivership pursuant to
Monetary Board Resolution No. 1744.A. As of March 31, 2013, the
PDIC had paid PHP582.3 million in deposit insurance claims for
3,335 accounts of depositors of First Country Bank.
=============
V I E T N A M
=============
VIETNAM BANK: Moody's Affirms B3 Foreign Currency Deposit Ratings
-----------------------------------------------------------------
Moody's Investors Service affirmed the debt and deposit ratings of
Vietnam Bank for Industry and Trade (VietinBank) of B2 in local
currency and B3 in foreign currency.
At the same time, Moody's has raised Vietinbank's baseline credit
assessment (BCA) to b3 from caa1 following the capital transfer
from Bank of Tokyo Mitsubishi UFJ (BTMU, Aa3 stable; C/a3 stable),
which has acquired a 19.73% ownership in VietinBank for VND15.5
trillion ($743 million).
The outlook on VietinBank's ratings is stable. This concludes the
review for upgrade that was announced on January 16, 2013.
Ratings Rationale:
The completion of the transaction with BTMU results in a
substantial increase in VietinBank's Tier 1 capital ratio, to
approximately 14% from 9.34% as of March 2013. This injection of
fresh, measurable capital in the bank gives us confidence that the
transaction has distanced VietinBank from the risk of requiring
external assistance in the near term to remain economically
solvent.
Nevertheless, a substantial capital increase of this magnitude
will not address the fundamental weaknesses that characterize the
Vietnamese banking system -- such as asset quality pressure
arising from a difficult operating environment, weak accounting,
the lack of transparency, and weak governance frameworks. These
factors were also taken into account in the assignment of the
relatively low BCA of b3. Yet, this leaves VietinBank with the
highest BCA among Moody's-rated banks in Vietnam.
Furthermore, the affirmation on VietinBank's debt and deposit
ratings reflects Moody's assessment that the probability that
support would be provided by the government of Vietnam (B2 stable)
in a systemic crisis is still very high, given the presence of the
government ownership and VietinBank's market share of 12.53% of
the banking system loans and 11.23% in terms of system deposits as
of end-2012. The government stake will be diluted to about 64.46%
after the transaction. Nevertheless, the government will continue
to exert considerable influence on VietinBank through its majority
interest.
VietinBank's affirmed ratings are:
- long-term/short-term foreign currency and local currency issuer
ratings of B2/Not Prime;
- long-term/short-term local currency deposit ratings of B2/Not
Prime;
- long-term/short-term foreign currency deposit ratings of B3/Not
Prime; and
- foreign currency senior unsecured rating of B2.
The principal methodology used in this rating was Moody's
Consolidated Global Bank Rating Methodology published in June
2012.
Headquartered in Hanoi, VietinBank reported total assets of
VND503.5 trillion ($24.19 billion) at end-December 2012.
===============
X X X X X X X X
===============
* Upcoming Meetings, Conferences and Seminars
---------------------------------------------
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., Washington, D.C., USA.
Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel
Elaine T. Fernandez, Julie Anne L. Toledo, Frauline S. Abangan,
and Peter A. Chapman, Editors.
Copyright 2013. 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
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TCR-AP subscription rate is US$775 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 215-945-7000 or Nina Novak at 202-241-8200.
*** End of Transmission ***