/raid1/www/Hosts/bankrupt/TCRAP_Public/130708.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
Monday, July 8, 2013, Vol. 16, No. 133
Headlines
A U S T R A L I A
BONSHAW PROPRIETARY: Court Appoints Clifton Hall as Liquidator
GRIFFIN COAL: Lanco Rebuffs Aussie Unit Liquidation Concern
PEPPER RESIDENTIAL: S&P Assigns BB Rating to Class E Notes
SEIZA AUGUSTUS 2007-1: S&P Affirms B- Rating to Class D Notes
C H I N A
CHINA FISHERY: Fitch Affirms 'BB-' IDR; Revises Outlook to Neg.
CHINA ORIENTAL: Profit Decline Triggers Moody's Ratings Cut
CHINA RONGSHENG: Seeks Financial Aid From Chinese Government
LDK SOLAR: Sells 25 Million Ordinary Shares to Fulai
I N D I A
A.S. JUTE: CRISIL Upgrades Ratings on INR268.4MM Loans to 'B-'
AIMIL PHARMA: CRISIL Places 'B+' Ratings on INR200MM Loans
ALCHEMIST LTD: CRISIL Assigns 'B+' Ratings to INR305MM Loans
BROCADE INDIA: CRISIL Assigns 'B' Ratings to INR68.7MM Loans
DEV RAJ: CRISIL Assigns 'B-' Rating to INR97.5MM Term Loan
EDEN CRITICAL: CRISIL Assigns 'B' Rating to INR195MM Term Loan
LAVANYA GOLD: CRISIL Cuts Rating on INR600MM Loan to 'D'
MANDAVA COTTON: CRISIL Assigns 'D' Ratings to INR183.9MM Loans
NORTECH POWER: CRISIL Cuts Ratings on INR820MM Loans to 'D'
NYSE INFRASTRUCTURE: CRISIL Rates INR1.1BB LT Loan at 'CRISIL D'
RAUSHEENA UDYOG: CRISIL Upgrades Rating on INR198MM Loans to 'B-'
RKM HOUSING: CRISIL Cuts Rating on INR76MM Loan to 'CRISIL C'
SRI MURUGARAJENDRA: CRISIL Cuts Ratings on INR1.81BB Loans to 'D'
SUNDER SIDDHI: CRISIL Cuts Ratings on INR330MM Loans to 'D'
TROPICOOL FOODS: CRISIL Assigns 'B-' Ratings to INR66.8MM Loans
VAAS AUTOMATION: CRISIL Lowers Rating on INR50MM Loan to 'B+'
I N D O N E S I A
ENERGI MEGA: Moody's Assigns B2 CFR with Stable Outlook
KAWASAN INDUSTRI: Fitch Upgrades Issuer Default Rating to 'B+'
J A P A N
PANASONIC CORP: To Shut Solar Cell Plant in Hungary; Axe 550 Jobs
N E W Z E A L A N D
ROSS ASSET: Receivers Sell Ross Family Paintings For NZ$199K
STRATEGIC FINANCE: Receivers Complete Settlement Talks w/ Execs
P A K I S T A N
* PAKISTAN: Reaches Agreement with IMF on US$5.3BB EFF Program
P H I L I P P I N E S
RURAL BANK OF SAN FERNANDO: Placed under PDIC receivership
S I N G A P O R E
FIRST SHIP: S&P Cuts CCR to 'B' & Puts Rating on Creditwatch Neg.
FRASERS COMMERCIAL: S&P Affirms & Withdraws 'BB+' CCR Rating
X X X X X X X X
* Moody's Outlook on Global Airline Sector Remains Stable
- - - - -
=================
A U S T R A L I A
=================
BONSHAW PROPRIETARY: Court Appoints Clifton Hall as Liquidator
--------------------------------------------------------------
Mark Hall of Clifton Hall was appointed liquidator of Bonshaw
Proprietary Limited on July 2, 2013, by Order of the Supreme Court
of South Australia.
GRIFFIN COAL: Lanco Rebuffs Aussie Unit Liquidation Concern
-----------------------------------------------------------
Rajesh Kumar Singh & David Stringer at Bloomberg News report that
Lanco Infratech Ltd. (LANCI), an Indian power company, expects to
avoid closing its Australian mining business Griffin Coal Mining
even as the unit faces liquidation proceedings for unpaid tax.
"No winding-up order has been issued" against Griffin Coal Mining,
A. Narasimhan, a spokesman for Lanco, said in an e-mail. "We are
confident that there is no basis for winding up and that the
matter with the Australian Taxation Office will be resolved as
soon as possible."
Bloomberg News, citing the Australian Financial Review, reports
that the tax office has applied to a court in Perth to appoint a
liquidator. Lanco has yet to file a defense, AFR said.
According to the report, CFMEU labor union said the Lanco unit,
acquired by the New Delhi-based utility for AUD730 million
(US$669 million) in 2011, has delayed pension payments to workers
after reporting losses. It also deferred payments to supplier Dyno
Nobel Pty. Ltd., which has halted deliveries of explosives used in
mines, the CFMEU said.
"Without the supply of explosives, it limits our ability to
produce coal, and that's where we get our cash flow from," Gary
Wood, the union's Western Australian district secretary, told
Bloomberg by phone.
Griffin posted a loss before interest, tax, depreciation and
amortization of INR1.05 billion (US$17.4 million) in the year
through March, almost double the loss a year earlier, according to
a May statement obtained by Bloomberg.
Based in Australia, The Griffin Coal Mining Company Pty Ltd --
http://www.griffincoal.com.au/-- is engaged in coal mining and
processing. Griffin Coal operates major mines in the Collie area,
approximately 220 kilometers south east of Perth. The Company is
producing more than three million tons of coal per year. Griffin
Coal has operations at Ewington Mine, Muja Mine and Buckingham
Mine.
* * *
As reported by the Troubled Company Reporter-Asia Pacific on
Jan. 4, 2010, Bloomberg News said Griffin Coal Mining Co.
appointed Kordamentha as administrator with total debts amounting
to AUD700 million. The coal supplier defaulted on an interest
payment in December 2009 to bondholders owed US$475 million and
also missed a payment to Australia's tax authority.
PEPPER RESIDENTIAL: S&P Assigns BB Rating to Class E Notes
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned its ratings to the
seven classes of nonconforming residential mortgage-backed
securities (RMBS) issued by GT Australia Nominees Ltd. as trustee
of Pepper Residential Securities Trust No.10. Pepper Residential
Securities Trust No.10 is a securitization of nonconforming
residential mortgages originated by Pepper HomeLoans Pty Ltd.
(Pepper).
The ratings reflect:
-- S&P's view of the credit risk of the underlying collateral
portfolio, including the fact that this is a closed
portfolio, which means no further loans will be assigned to
the trust after the closing date.
-- S&P's view that the credit support is sufficient to
withstand the stresses it applies. This credit support
comprises note subordination for each class of rated note.
-- The availability of a retention amount built from excess
spread, and applied monthly to the most subordinated rated
note at that time.
-- The availability of a yield reserve built from excess
spread, and made available to meet interest shortfalls on
the class A and class B notes.
-- The extraordinary expense reserve of A$150,000, funded from
day one, available to meet extraordinary expenses. The
reserve will be topped up via excess spread if drawn.
-- S&P's expectation that the various mechanisms to support
liquidity within the transaction, including a liquidity
facility equal to 1.9 % of the outstanding balance of the
notes plus A$2.1 million, and principal draws, are
sufficient under its stress assumptions to ensure timely
payment of interest.
-- The condition that a minimum margin will be maintained on
the assets.
A copy of Standard & Poor's complete report for Pepper Residential
Securities Trust No.10 can be found on Global Credit Portal,
Standard & Poor's Web-based credit analysis system, at
http://www.globalcreditportal.com
The issuer has informed Standard & Poor's (Australia) Pty Limited
that the issuer is publically disclosing all relevant information
about the structured finance instruments the subject of this press
release.
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and a
description of how they differ from the representations,
warranties and enforcement mechanisms in issuances of similar
securities.
The Standard & Poor's 17g-7 Disclosure Report included in this
credit rating report is available at:
http://standardandpoorsdisclosure-17g7.com/1465.pdf
REGULATORY DISCLOSURES
Please refer to the initial rating report for any additional
regulatory disclosures that may apply to a transaction.
RATINGS ASSIGNED
Class Rating Amount (mil. A$)
A-1 AAA (sf) 245.0
A-2 AAA (sf) 38.85
B AA (sf) 18.2
C A (sf) 17.15
D BBB (sf) 12.25
E BB (sf) 8.05
F B (sf) 5.6
G N.R. 4.9
N.R.--Not rated.
SEIZA AUGUSTUS 2007-1: S&P Affirms B- Rating to Class D Notes
--------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on the
class D and class E notes issued by the trustee of Seiza Augustus
Series 2007-1 Trust. The notes are backed by a portfolio of
residential and small-ticket commercial mortgage loans originated
by Seiza Mortgage Co. Pty Ltd. The rating affirmations reflect
S&P's view that the rated notes are able to withstand stresses
that are commensurate with their current rating levels.
The notes are performing within S&P's current rating expectations,
based on S&P's latest performance review of the transaction. The
class D notes have benefited from an increase in credit
enhancement as a proportion of the outstanding balance as the
portfolio amortizes.
Nevertheless, the pool faces rising adverse selection risk at the
tail end of the transaction, whereby borrowers that are
susceptible to financial difficulties may remain in the pool.
The concentration of borrowers with large loans is high, with the
top 10 borrowers accounting for about 43% of the portfolio as of
May 20, 2013. The total portfolio consists of 75 loans that make
the portfolio susceptible to further concentration risks.
As of May 20, 2013, cumulative net losses total AUD32.5 million
(8.0% of the original portfolio balance). Excess spread generated
from this trust has only covered AUD19.2 million of net losses.
S&P believes the portfolio might record further losses, and that
the pool will continue to have a slow repayment rate.
Although S&P expects further defaults and losses to emerge, the
current credit enhancements are commensurate with the current
ratings on the 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
REGULATORY DISCLOSURES
Please refer to the initial rating report for any additional
regulatory disclosures that may apply to a transaction.
RATINGS AFFIRMED
Class Rating
D B- (sf)
E CCC- (sf)
The class F note is in default and rated 'D'.
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C H I N A
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CHINA FISHERY: Fitch Affirms 'BB-' IDR; Revises Outlook to Neg.
---------------------------------------------------------------
Fitch Ratings has revised China Fishery Group Limited's Outlook to
Negative from Stable. Its Long-Term Issuer Default Rating (IDR),
its senior unsecured rating, and its USD300 million senior
unsecured notes are affirmed at 'BB-'.
The Outlook has been revised to Negative following China Fishery's
higher-than-expected offer of USD778 million for the entire equity
interest in Copeinca from the previously stated valuation of
USD600m. Fitch expects this higher acquisition price and a weaker-
than-expected performance in the Peruvian fishmeal industry this
year to increase China Fishery's 2013 leverage, as measured by
adjusted net debt/EBITDAR, to above 3.0x, before falling
marginally below this level in 2014. Nevertheless, the risk
remains for China Fishery's leverage to be above 3.0x, in the
event of operational or capital budgeting surprises.
KEY RATING DRIVERS
Reduced financial flexibility: Fitch expects China Fishery's
leverage to exceed 3.0x following its Copeinca acquisition despite
having raised USD278m from an April rights issue. Fitch does not
expect any imminent further equity fund-raising after this rights
issue. Operating cash flow will also have to be channelled towards
deleveraging as debt drawn down for the Copeinca acquisition is
being repaid.
Defensive operation supports ratings: China Fishery's ratings
reflect its resilient operation towards climate and market
environmental changes as evidenced by its stable EBITDAR. Weaker
volumes due to lower fishing harvests are often compensated by
higher selling prices. This is evident in strong price increases
of Peruvian fishmeal and fish oil as a result of significantly
lower total allowable catch (TAC) for Peru anchovies for the two
fishing seasons starting in November 2012 and May 2013. Prices of
Peruvian fishmeal at end-March hit a record USD2,200 per metric
ton compared with between USD1,200 and USD1,600 in 2012. As a
result China Fishery's H113 EBITDAR margin rose to 45% versus 40%
for 2012.
RATING SENSITIVITIES
Positive: Future developments that may, individually or
collectively, lead to positive rating action, such as a change in
Outlook to Stable, include:
-- A fall in adjusted net debt/EBITDAR to below 3x in FY14
(ending September)
-- No material changes to contract supply operations leading
to substantial cash losses
-- Maintaining operating EBITDAR margin above 30%
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
-- any of the above factors not being met
CHINA ORIENTAL: Profit Decline Triggers Moody's Ratings Cut
-----------------------------------------------------------
Moody's Investors Service has downgraded China Oriental Group
Company Limited's corporate family rating and its senior unsecured
rating to Ba3 from Ba2. The ratings outlook remains negative.
Ratings Rationale:
The ratings downgrade comes after the company's announcement on
June 28, 2013 that it is likely to experience a substantial
decline in profits in the first half of 2013 compared with the
same period a year ago.
"The downgrade reflects our concern that China Oriental is
unlikely to improve its profitability and financial profile in
2013 to levels appropriate for the Ba2 rating. Weak demand and
excess supply in China's steel industry will continue to pose
challenges in the medium term," says Jiming Zou, a Moody's
Assistant Vice President.
China Oriental's profit warning reflects the deterioration in its
financial position owing to declining steel prices in the first
half of 2013. This negative trend will continue, given the
oversupply situation stemming from the currently record high
production in the domestic steel industry and the expected
destocking by steelmakers in the second half of 2013.
At the same time, demand -- expected to grow in the low single
digits in percentage terms in 2013 -- will be constrained by the
slower growth of the Chinese economy, as well as the government's
move to shift growth drivers to domestic consumption from
infrastructure spending.
As a result, Moody's expects China Oriental's EBITDA margin to
remain low at around 5% in 2013 -- compared to 9% in 2010 and 2011
-- despite its efforts to cut costs and lower purchase prices for
iron ore and coking coal.
Moody's also expects China Oriental's gross debt/EBITDA to be at
around 5.0x in 2013, slightly lower than the 5.4x it recorded at
end-2012. However, this level will be significantly higher than
the maximum level of 3.0x-3.5x required for a Ba2 rating. Its
estimated EBITDA interest cover of around 2.5x-3.0x in the next
two years is also weak for the Ba2 rating level.
"Another reason for the downgrade is China Oriental's weak risk
management," Zou says.
China Oriental's subsidiary, Jinxi Jinlan, recorded a substantial
loss in 2012 owing to poor risk management over construction costs
and prepayment to suppliers. Moreover, the company has forgone its
loan receivables and made payments to acquire the production
facility from financially distressed Qianxi County Jinxi Wantong
Ductile Iron Pipe Limited to ensure uninterrupted operations.
Furthermore, its strategy to invest in non-core businesses -- such
as property development and commercial lending -- has also raised
its risk profile, and which has in turn pressured its rating.
The company has limited experience in these businesses, which
require funding but generate low cash flow returns until they
achieve a meaningful scale.
The Ba3 ratings are supported by China Oriental's established
market position as the largest H-section steel manufacturer in
China, as well as its efficient steel production and good control
over costs.
However, the negative outlook reflects the continued weak
profitability in its core steelmaking business, and the increased
business risk from its non-core businesses.
Moody's could change the ratings outlook to stable, if the company
slows down its investments in non-core businesses and improves its
profitability such that its debt/EBITDA falls below 4.5x and
EBITDA/interest exceeds 3.0x.
The rating will be under pressure for further downgrade if the
company's debt/EBITDA remains above 4.5x in the next 12-18 months.
The principal methodology used in this rating was the Global Steel
Industry Methodology published in October 2012.
China Oriental Group Company Ltd, with total steel manufacturing
capacity of 11 million tons per annum, mainly manufactures H-
section steel products and HR strips/strip products at its steel
mills in Hebei province. The company was listed on the Hong Kong
Stock Exchange in 2004. It is 45% owned by its founder, Mr. Han
Jingyuan, and 29.6% by ArcelorMittal.
CHINA RONGSHENG: Seeks Financial Aid From Chinese Government
------------------------------------------------------------
The Wall Street Journal reports that China Rongsheng Heavy
Industries Group Holdings said Friday that it is struggling to pay
its employees and is seeking financial help from the government to
see the shipbuilder through a prolonged industry slump.
The Journal says Rongsheng didn't mention the cash squeeze that
gripped China's financial system last month in what was widely
seen as a warning from Beijing over freewheeling lending. But in
the company's statements, the Journal relates, the company said
credit had become harder to come by because of industrywide woes
in shipbuilding.
"Banks and other financial institutions have tightened credit
facilities available to shipbuilders, and many shipowners have
delayed, renegotiated or defaulted on payments to shipbuilders,"
Rongsheng said Friday in a filing with the Hong Kong Stock
Exchange cited by the Journal. The increased financial pressure
had caused the company to delay "payment to its suppliers and
workers" in recent months, it said.
A Rongsheng executive said in an interview earlier last week that
the company had already laid off about 40% of its 20,000
employees, the Journal reports.
According to the report, Rongsheng said it expects to report a net
loss for the six months ended June 30. The shipbuilder posted a
loss attributable to equity holders of CNY573 million
(US$93.4 million) for all of last year.
The Journal relates that Rongsheng said Friday it is in
discussions with a number of banks about "renewing existing credit
facilities." The news agency reports that the company also said
it has reached an accord with a company controlled by key
shareholder Zhang Zhirong, the shipbuilder's founder and former
chairman, for an interest-free and security-free loan of
CNY200 million (US$32.4 million).
Set up in 2005 and owned by private investors, Rongsheng has
become one of China's biggest shipbuilders, the Journal discloses.
Last year, it was China's third biggest shipbuilder in terms of
output in deadweight tonnage, a measure of how much weight a ship
can carry, according to Clarkson Research Services, the research
arm of Clarkson shipbrokers. The two largest shipbuilders are
state-owned.
LDK SOLAR: Sells 25 Million Ordinary Shares to Fulai
----------------------------------------------------
LDK Solar Co., Ltd., sold 25,000,000 newly issued ordinary shares
to Fulai Investments Limited, at a purchase price of $1.03 per
share with an aggregate purchase price of $25,750,000, pursuant to
the share purchase agreement dated April 25, 2013.
About LDK Solar
LDK Solar Co., Ltd. -- http://www.ldksolar.com-- based in Hi-
Tech Industrial Park, Xinyu City, Jiangxi Province, People's
Republic of China, is a vertically integrated manufacturer of
photovoltaic products, including high-quality and low-cost
polysilicon, solar wafers, cells, modules, systems, power
projects and solutions.
LDK Solar was incorporated in the Cayman Islands on May 1, 2006,
by LDK New Energy, a British Virgin Islands company wholly owned
by Xiaofeng Peng, LDK's founder, chairman and chief executive
officer, to acquire all of the equity interests in Jiangxi LDK
Solar from Suzhou Liouxin Industry Co., Ltd., and Liouxin
Industrial Limited.
LDK Solar Co disclosed a net loss of $1.05 billion on
$862.88 million of net sales for the year ended Dec. 31, 2012, as
compared with a net loss of $608.95 million on $2.15 billion of
net sales for the year ended Dec. 31, 2011. As of March 31, 2013,
the Company had $4.99 billion in total assets, $5.29 billion in
total liabilities, $356.60 million in redeemable non-controlling
interests and a $660.58 million total deficit.
KPMG, in Hong Kong, China, issued a "going concern" qualification
on the consolidated financial statements for the year ended
Dec. 31, 2012. The independent auditors noted that LDK Solar has
a net working capital deficit and a deficit in total equity as of
Dec. 31, 2012, and is restricted from incurring additional
indebtedness as it has not met a financial covenant ratio as
defined in the indenture governing the RMB-denominated US$-settled
senior notes. These conditions raise substantial doubt about the
Group's ability to continue as a going concern.
=========
I N D I A
=========
A.S. JUTE: CRISIL Upgrades Ratings on INR268.4MM Loans to 'B-'
--------------------------------------------------------------
CRISIL has upgraded its rating on the long-term bank facilities of
A.S. Jute Products Pvt Ltd to 'CRISIL B-/Stable' from 'CRISIL D',
while reassigning its CRISIL A4 rating to the short-term bank
facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 60.0 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Term Loan 190.4 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Bank Guarantee 1.6 CRISIL A4 (Reassigned)
Proposed Long-Term 18.0 CRISIL B-/Stable (Upgraded
Bank Loan Facility from 'CRISIL D')
The rating upgrade reflects the timely servicing of debt by ASJPPL
over the five months through May 2013. The upgrade also factors in
CRISIL's belief that ASJPPL will continue to receive funding
support from its promoters, for timely repayment of its term debt
obligations.
The rating also reflects ASJPPL's weak financial risk profile,
marked by a modest net worth, high gearing and subdued debt
protection metrics, modest scale of operations, and exposure to
risks related to the regulated nature of the jute industry. These
rating weaknesses are partially offset by the extensive industry
experience of ASJPPL's promoters.
Outlook: Stable
CRISIL believes that ASJPPL will continue to benefit over the
medium term from its promoters' extensive industry experience. The
outlook may be revised to 'Positive' if ASJPPL scales up its
operations and registers significant increase in its revenues and
profitability, leading to improvement in its financial risk
profile, or in case of equity infusions, leading to sizeable
improvement in its capital structure. Conversely, the outlook may
be revised to 'Negative' in case of any stretch in the company's
working capital cycle, leading to deterioration in liquidity or in
case ASJPPL undertakes any large, debt-funded capital expenditure
(capex) programme, resulting in further weakening of its financial
risk profile.
ASJPPL was incorporated in November 2010, for setting up a project
comprising of two units for manufacturing of jute fine yarn and
jute gunnies. Mr. A. Nagesh Kumar, Mr. Om Prakash Rathi and Mr.
Sunil Kumar Bhararia are the promoters of the company. Commercial
operations at the first unit started in March 2012 and the second
unit is expected to be operational from July 2013.
In 2012-13 (refers to financial year, April 1 to March 31), ASJPPL
is estimated to report a net loss of INR11.3 million on net sales
of INR229.7 million against a net loss of INR1.18 million on net
sales of INR0.5 million in 2011-12.
AIMIL PHARMA: CRISIL Places 'B+' Ratings on INR200MM Loans
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable' rating to the bank
facilities of Aimil Pharmaceuticals (I) Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 100 CRISIL B+/Stable
Proposed Long-Term 100 CRISIL B+/Stable
Bank Loan Facility
The rating reflects AIMIL's stretched liquidity driven by its
working-capital-intensive operations, and the company's average
financial risk profile marked by moderate gearing and weak debt
protection metrics. These rating weaknesses are partially offset
by the extensive experience of AIMIL's promoters in the
pharmaceuticals industry, and the company's moderate scale of
operations backed by established product profile.
Outlook: Stable
CRISIL believes that AIMIL will benefit over the medium term from
the extensive industry experience of its promoters in the
pharmaceuticals industry. The outlook may be revised to 'Positive'
if the company significantly improves its cash accruals most
likely due to a significant increase in the scale of its
operations, while improving its profitability and capital
structure. Conversely, the outlook may be revised to 'Negative' if
the company reports significant deterioration in its working
capital cycle, or lower-than-expected cash accruals which
adversely affect its financial risk profile.
AIMIL was established in 1984 in New Delhi. The company was
founded by Mr. K.K. Sharma. AIMIL manufactures and sells Ayurvedic
and Unani medicines (both traditional forms of medicine), under
its Neeri, Lukoskin, Amree Plus, Purodil, Amroid, Amlycure,
Amycordial and Zymnet brands. The company has manufacturing
facilities in Nalagarh (Himachal Pradesh) and New Delhi.
AIMIL reported a profit-after-tax (PAT) of INR2.6 million on net
sales of INR881.0 million for 2011-12 (refers to financial year,
April 1 to March 31), and PAT of INR5.0 million on net sales of
INR702.5 million for 2010-11.
ALCHEMIST LTD: CRISIL Assigns 'B+' Ratings to INR305MM Loans
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B+/Stable/CRISIL A4' ratings to
the bank facilities of Alchemist Ltd (AL; part of the Alchemist
group).
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 212.3 CRISIL B+/Stable
Proposed Long-Term 33.7 CRISIL B+/Stable
Bank Loan Facility
Cash Credit 59.0 CRISIL B+/Stable
Letter of Credit 20.0 CRISIL A4
The ratings reflect the Alchemist group's constrained business
risk profile due to continuous decline in its operating
profitability, and its small scale of operations in the
pharmaceutical and food processing business; the group also faces
high project implementation risk. These rating weaknesses are
partially offset by the Alchemist group's long track record in the
food processing and pharmaceutical industries with an established
clientele; its well-diversified product portfolio with a wide
geographical reach in the domestic market; and its moderate
financial risk profile, marked by a comfortable capital structure
and healthy debt protection metrics.
For arriving at the ratings, CRISIL has combined the business and
financial risk profiles of AL and Alchemist Foods Ltd (AFL),
together referred to as the Alchemist group. This is because AFL
is a wholly owned subsidiary of AL, and both the companies are
under a common management, although there are no inter-company
transactions or major financial linkages between them.
Outlook: Stable
CRISIL believes that the Alchemist group will continue to benefit
over the medium term from its long track record in the
pharmaceutical and food processing industries and its well-
diversified operations. The outlook may be revised to 'Positive'
if the group generates higher-than-expected cash accruals, backed
by a significant improvement in its operating margin while
sustaining its revenue growth. Conversely, the outlook may be
revised to 'Negative' in case of lower-than-expected revenues,
further decline in the group's operating margin, or a time or cost
overrun in the proposed debt-funded capital expenditure programme,
resulting in weakening in its financial risk profile. The ratings
are also sensitive to the continued financial support to the
Alchemist group's from other group entities.
AL was initially established as a private limited company in 1988
by Dr. K D Singh under the name, Turbo Industries Ltd (TIL). TIL
was reconstituted as a public limited company and renamed AL when
it came out with its initial public offering in 1994. AL has grown
into a diversified corporation with operations in chemicals
trading, pharmaceuticals, food-processing, floriculture, and
steel.
AFL, a wholly owned subsidiary of AL, was hived off from AL in
2009. AFL is a farm-to-fork company engaged in poultry breeding
and hatching, and sale of raw and value-added meat products
through its retail chain, Republic of Chicken. AFL's portfolio
includes whole birds, eggs, chicken cuts, boneless breasts,
boneless leg meat, sausages and other cold cuts, and ready-to-eat
poultry products.
For 2012-13 (refers to financial year, April 1 to March 31), the
Alchemist group reported, on a consolidated basis, a net profit of
INR280.5 million on net sales of INR14575.9 million, against a net
profit of INR238.9 million on net sales of INR8857.9 million for
2011-12.
BROCADE INDIA: CRISIL Assigns 'B' Ratings to INR68.7MM Loans
------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable/CRISIL A4' ratings to the
bank facilities of Brocade India Polytex Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Proposed Long-Term 5.7 CRISIL B/Stable
Bank Loan Facility
Long Term Loan 25.5 CRISIL B/Stable
Bank Guarantee 1.3 CRISIL A4
Cash Credit 37.5 CRISIL B/Stable
The ratings reflect the start-up nature of BIPL's operations, and
the susceptibility of the company's operating profitability to
volatility in raw material prices. These rating weaknesses are
partially offset by the entrepreneurial experience of BIPL's
management.
Outlook: Stable
CRISIL believes that BIPL will benefit over the medium term from
its management's entrepreneurial experience. The outlook may be
revised to 'Positive' if the company stabilises operations at its
manufacturing unit earlier than expected, resulting in higher-
than-expected accruals. Conversely, the outlook may be revised to
'Negative' if BIPL registers lower-than- expected revenues or
profitability, thereby negatively impacting its financial risk
profile.
BIPL, incorporated in 2012, manufactures polypropylene fabrics and
woven sacks. The company is promoted by Mr. Anwar Sahad and Mr.
Ebrahim Hasan.
BIPL, registered a loss of INR7.3 million on total revenue of
INR37.8 million for 2012-13 (refers to financial year, April 1 to
March 31).
DEV RAJ: CRISIL Assigns 'B-' Rating to INR97.5MM Term Loan
----------------------------------------------------------
CRISIL has assigned its 'CRISIL B-/Stable' rating to the long-term
bank facility of Dev Raj Institute of Management & Technology
Society.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 97.5 CRISIL B-/Stable
The rating reflects DRIMT's limited track record of operations as
well as exposure to intense competition in the education sector
and restrictions imposed by regulatory bodies. These rating
weaknesses are partially offset by the healthy demand prospects of
the education industry in Punjab.
Outlook: Stable
CRISIL believes that DRIMT will register moderate growth over the
medium term, backed by its new course offerings. The outlook may
be revised to 'Positive' if there's more than expected scale up in
its operations registering significant increase in intake of
students across the courses it has on offer, resulting in
improvement in its net cash accruals and consequently, its
financial risk profile. Conversely, the outlook may be revised to
'Negative' if DRIMT records substantial decline in student intake
or if it undertakes any large, debt-funded capital expenditure
programme, resulting in deterioration in its financial risk
profile.
DRIMT was set up in 2010 by the Ferozepur (Punjab)-based Gupta
family. The firm is promoted by its chairman, Mr. Ravi Kant Gupta,
and his brother, Mr. Rohit Gupta. DRIMT offers educational
services through its institute "Dev Raj Group's Technical Campus".
DRIMT reported a net loss of INR5.74 million on net fee income of
INR4.52 million for 2011-12 (refers to financial year, April 1 to
March 31).
EDEN CRITICAL: CRISIL Assigns 'B' Rating to INR195MM Term Loan
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL B/Stable' rating to the long-term
bank facility of Eden Critical Care Hospital Pvt Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Term Loan 195 CRISIL B/Stable
The rating reflects Eden's exposure to project implementation and
funding risk. These rating weaknesses are partially offset by the
extensive experience of promoters in the field of medicine.
Outlook: Stable
CRISIL believes that Eden will maintain its credit profile on the
back of the extensive experience of its promoters in the field of
medicine. The outlook may be revised to 'Positive' if the
company's proposed hospital begins operations without time and
cost overrun resulting in higher-than-expected revenue.
Conversely, the outlook may be revised to 'Negative' in case of
delay in implementation and approvals that result in delay in the
commencement of operations and constrain the debt-repayment
ability of the company.
Eden was set up in 2011 by Dr. Sanjay Bansal and his family
members in Chandigarh (Punjab). The promoters are setting up a
100-bed multi-speciality hospital in the city.
LAVANYA GOLD: CRISIL Cuts Rating on INR600MM Loan to 'D'
--------------------------------------------------------
CRISIL has downgraded its rating on the long-term bank facility of
Lavanya Gold Jewels India Pvt Ltd to 'CRISIL D' from 'CRISIL
BB/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 600 CRISIL D (Downgraded from
'CRISIL BB/Stable')
The rating downgrade reflects significant deterioration in the
company's liquidity impacting their timely debt servicing ability.
The rating also factors in the company's below-average financial
risk profile, marked by a weak capital structure, and the
susceptibility of the company's operating profitability to
volatility in gold prices and intense competition in the gold
jewellery market.
LJ, set up in 2007 and based in Coimbatore, is in the gold
jewellery business. Its day-to-day operations are managed by Mr. N
Ashok and his brother Mr. N Balaji.
MANDAVA COTTON: CRISIL Assigns 'D' Ratings to INR183.9MM Loans
--------------------------------------------------------------
CRISIL has assigned its 'CRISIL D/CRISIL D' ratings to the bank
facilities of Mandava Cotton Mills Pvt Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Working Capital 15.5 CRISIL D
Term Loan
Long-Term Loan 93.4 CRISIL D
Cash Credit 55.0 CRISIL D
Letter of Credit 20.0 CRISIL D
The ratings reflect instances of delay by MCMPL in servicing its
debt; the delays have been caused by the company's weak liquidity
arising out of its large debt repayment obligations vis-…-vis
depressed cash accruals, and its working-capital-intensive
operations.
MCMPL also has a weak financial risk profile, marked by weak
capital structure and debt protection metrics. Furthermore, it has
a small scale of operations due to its limited capacity in the
highly fragmented cotton spinning industry. The company, however,
benefits from the funding support it receives from its promoters.
MCMPL was incorporated in 2006, promoted by Mr. Ventateshwara Rao.
The company manufactures cotton and polyester yarn at its facility
in Krishna (Andhra Pradesh).
NORTECH POWER: CRISIL Cuts Ratings on INR820MM Loans to 'D'
-----------------------------------------------------------
CRISIL has downgraded its ratings on the bank loan facilities of
Nortech Power Projects Pvt Ltd to 'CRISIL D/CRISIL D' from 'CRISIL
C/ CRISIL A4'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 750 CRISIL D (Downgraded from
'CRISIL A4')
Cash Credit 70 CRISIL D (Downgraded from
'CRISIL C')
The rating downgrade reflects Nortech's continuously overdrawn
cash credit limits for over 30 consecutive days; the cash credit
has been overdrawn on account of the company's weak liquidity.
Nortech also has geographic concentration in its revenues and a
small scale of operations. These weaknesses are partially offset
by the extensive experience of Nortech's promoters in the
hydroelectric power industry.
Nortech is part of the Kolkata-based GNG group, which trades in
minerals such as iron ore fines, chrome, manganese, and limestone.
It undertakes engineering, procurement, and commissioning
contracts in the power and infrastructure sectors of north-eastern
India. The company focuses on hydropower generation projects of
different ranges. These projects range from 5 to 10,000 kilowatt
(kW) capacity.
NYSE INFRASTRUCTURE: CRISIL Rates INR1.1BB LT Loan at 'CRISIL D'
----------------------------------------------------------------
CRISIL has assigned its 'CRISIL D' rating to the long-term bank
facility of NYSE Infrastructure Pvt Ltd.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Long-Term Loan 1,100 CRISIL D (Assigned)
The rating reflects instances of delay by NYSE in paying the
interest on its term loan; the delays have been caused by NYSE's
weak liquidity.
NYSE also has below-average financial risk profile, marked by
highly leveraged capital structure and weak debt protection
metrics. However, NYSE benefits from its stable annuity structure
and promoters' industry experience.
NYSE was incorporated as a special-purpose vehicle by Navayuga
Engineering Company Ltd and Soma Enterprises Ltd in 2001. NYSE
undertook construction of a four-lane highway of around 17
kilometres on National Highway-5, the Chennai-Kolkata section of
the Golden Quadrilateral project. The project was a build,
operate, and transfer project on an annuity basis from National
Highway Authority of India.
For 2012-13 (refers to financial year, April 1 to March 31), NYSE
reported, on a provisional basis, a profit after tax of INR4
million on net sales of INR259 million; the company reported a net
loss of INR12 million on net sales of INR259 million for 2011-12.
RAUSHEENA UDYOG: CRISIL Upgrades Rating on INR198MM Loans to 'B-'
----------------------------------------------------------------
CRISIL has upgraded its ratings on the bank facilities of
Rausheena Udyog Ltd to 'CRISIL B-/Stable/CRISIL A4' from 'CRISIL
D/CRISIL D'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 105 CRISIL A4 (Upgraded from
'CRISIL D')
Cash Credit 87.5 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
Letter of Credit 5.0 CRISIL A4 (Upgraded from
'CRISIL D')
Term Loan 110.5 CRISIL B-/Stable (Upgraded
from 'CRISIL D')
The rating upgrade reflects timely servicing of debt by RUL
following the rephasement of its term loan, which was sanctioned
by the bank in February 2013. The financial risk profile of RUL is
supported by the ballooning structure of the revised repayment
schedule. Moreover, CRISIL believes that with the operating
turnover of RUL expected to improve over the near to medium term,
the company will generate sufficient cash accruals to meet its
revised debt obligations on time.
The ratings continue to reflect RUL's weak financial risk profile,
marked by a moderate net worth, weak debt protection metrics and
average liquidity, on account of working-capital-intensive
operations. These rating weaknesses are partially offset by the
extensive industry experience of RUL's promoter.
Outlook: Stable
CRISIL believes that RUL will continue to benefit over the medium
term from its promoter's extensive industry experience. The
outlook may be revised to 'Positive' if the company registers
more-than-expected revenues and profitability, resulting in
improvement in its liquidity. Conversely, the outlook may be
revised to 'Negative' in case the company undertakes a larger-
than-expected, debt-funded capital expenditure programme, leading
to deterioration in its capital structure. The outlook may also be
revised to 'Negative' in case RUL generates less-than-expected
cash accruals, because of deterioration in its revenues or
profitability, or if its working capital requirements are larger
than expected, resulting in pressure on its liquidity.
RUL was set up in March 1998 by Mr. Saroj Agarwal in Shillong
(Meghalaya). The company currently has three divisions: food
division, engineering division, and bag trading division.
RKM HOUSING: CRISIL Cuts Rating on INR76MM Loan to 'CRISIL C'
-------------------------------------------------------------
CRISIL has downgraded its rating on the bank facility of RKM
Housing Ltd to 'CRISIL C' from 'CRISIL B+/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Working Capital 76 CRISIL C (Downgraded from
Term Loan 'CRISIL B+/Stable')
The downgrade reflects consistent delays by RKM in servicing the
interest obligation on its term loan. The company was disbursed a
term loan of INR200 million by Punjab National Bank in September
2012 for funding the construction at its ongoing housing project
in Mohali (Punjab). In the recent past, there have been instances
of delays in servicing monthly interest liability to the bank.
The rating also reflects RKM's exposure to project execution risk
with significant dependence on customer advances to fund project
costs and also to risks and cyclicality inherent in the Indian
real estate industry. These rating weaknesses are partially offset
by the benefits that the company derives from its promoters'
extensive experience and from its business model with focus on
sale of plots leading to better matching of cash inflows and
outflows.
Set up in 2006-07 (refers to financial year, April 1 to
March 31), RKM is currently engaged in development of a real
estate project at Sector 112 of Mohali. RKM, which was converted
into a closely held public company in 2008, is owned by Mr.
Walia's family. Since incorporation, the company has completed one
real estate project at Zirakpur, Punjab (a residential tower
project comprising of 88 flats).
SRI MURUGARAJENDRA: CRISIL Cuts Ratings on INR1.81BB Loans to 'D'
-----------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Sri
Murugarajendra Oil Industry Pvt Ltd to 'CRISIL D/CRISIL D' from
'CRISIL BB-/Stable/CRISIL A4+'. The rating downgrade reflects
instances of delay by SMOL in servicing its term debt; the delays
have been caused by the company's weak liquidity.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Bank Guarantee 2.5 CRISIL D (Downgraded from
'CRISIL A4+')
Cash Credit 345.0 CRISIL D (Downgraded from
'CRISIL BB-/Stable')
Letter of Credit 1,400.0 CRISIL D (Downgraded from
'CRISIL A4+')
Long-Term Loan 72.4 CRISIL D (Downgraded from
'CRISIL BB-/Stable')
SMOL has a weak financial risk profile, marked by an aggressive
capital structure and inadequate debt protection metrics.
Moreover, it is present in the intensely competitive edible oils
industry and is susceptible to volatility in raw material prices.
However, the company benefits from the extensive experience of its
promoter in the edible oils industry.
SMOL, located in Chitradurga (Karnataka), undertakes solvent
extraction and refining of edible oils. It processes, and trades
in, crude palm, rice bran, and sunflower oil. The overall
operations of the company are managed by Mr. K V Ravikumar.
SUNDER SIDDHI: CRISIL Cuts Ratings on INR330MM Loans to 'D'
-----------------------------------------------------------
CRISIL has downgraded its long-term rating on the bank facilities
of Sunder Siddhi to 'CRISIL D' from 'CRISIL BB-/Stable'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 300 CRISIL D (Downgraded from
'CRISIL BB-/Stable')
Proposed Long-Term 30 CRISIL D (Downgraded from
Bank Loan Facility 'CRISIL BB-/Stable')
The rating downgrade reflects the instance of delay by SS in
servicing its term debt; the delays have been caused by SS' weak
liquidity, marked by lower-than-expected sale of flats and
customer advances.
SS also has a below-average financial risk profile, marked by high
gearing and weak debt protection metrics and exposure to offtake
risks. These weaknesses are partially offset by the funding
support that SS receives from its promoters and their extensive
industry experience.
Established in 2006, SS is a partnership firm and is part of the
Shamit Buildcon LLP (SBL) group, which is engaged in real estate
development. The firm is developing a real estate project, Shamit
Octozone in three phases. The project involves construction of 800
residential flats/apartments, 80 build-to-suit bungalow plots, 96
independent bungalows, 1 school and a sports club facility in
Aurangabad (Maharashtra).
TROPICOOL FOODS: CRISIL Assigns 'B-' Ratings to INR66.8MM Loans
---------------------------------------------------------------
CRISIL has revoked the suspension of its rating on the bank
facilities of Tropicool Foods Pvt Ltd and has assigned its 'CRISIL
B-/Stable' rating to these facilities. CRISIL had earlier, through
its rating rationale dated January 17, 2013, suspended the ratings
as TFPL did not provide the information required to undertake a
rating review. The company has now shared the requisite
information, enabling CRISIL to assign ratings to the company's
bank facilities.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 36.2 CRISIL B-/Stable (Assigned;
Suspension Revoked)
Term Loan 30.6 CRISIL B-/Stable (Assigned;
Suspension Revoked)
The rating reflects TFPL's small scale of operations in a highly
fragmented food-processing industry and weak financial risk marked
by weak debt protection metrics and moderate gearing. These rating
weaknesses are partially offset by the benefits that TFPL derives
from the extensive experience of its promoters in the processed-
food industry.
Outlook: Stable
CRISIL believes that TFPL will maintain its business risk profile
over the medium term given the robust demand for processed-food
products. CRISIL also believes that TFPL will get funding support
from the promoters to meet debt obligation in a timely manner. The
outlook may be revised to 'Positive' if TFPL's scale of operations
increases leading to considerable improvement in its cash
accruals, which will be sufficient for payment of its term debt
obligations. Conversely, the outlook may be revised to 'Negative'
if there is a delay in funding support from the promoters leading
to delay in servicing term debt obligations or if the company's
liquidity deteriorates further on account of lower-than-expected
cash accruals.
TFPL was set up in 2006 by Mr. Vivek Nayak, Mr. Prakash Kanoor,
Mr. Pradeep Kanoor, and Mr. Georges Jan Marie Olbrechts. Ardo NV,
(a Belgium based company engaged in production and selling of
processed food) holds around 16 per cent stake in TFPL. It
processes vegetables and fruits through the individually quick
frozen-based method. TFPL is based in Hubli (Karnataka).
For 2011-12 (refers to financial year, April 1 to March 31), TFPL
reported net profit of INR0.1 million on net sales of INR76.1
million as against net loss of INR6.6 million on net sales of
INR41.1 million in 2010-11.
VAAS AUTOMATION: CRISIL Lowers Rating on INR50MM Loan to 'B+'
-------------------------------------------------------------
CRISIL has downgraded its ratings on the bank facilities of Vaas
Automation Pvt Ltd to 'CRISIL B+/Stable/CRISIL A4' from 'CRISIL
BB-/Stable/CRISIL A4+'.
Amount
Facilities (INR Mln) Ratings
---------- --------- -------
Cash Credit 50.00 CRISIL B+/Stable (Downgraded
from 'CRISIL BB-/Stable')
Packing Credit 10.00 CRISIL A4 (Downgraded from
'CRISIL A4+')
Letter of Credit 7.50 CRISIL A4 (Downgraded from
'CRISIL A4+')
Bank Guarantee 10.00 CRISIL A4 (Downgraded from
'CRISIL A4+')
The downgrade reflects CRISIL's belief that VAPL's financial risk
profile will come under pressure over the medium term, because of
its weak cash accruals and working-capital-intensive nature of
operations, which will need debt funding. The weak cash accruals
are driven by the decline in demand for the company's products in
the domestic market, and its constrained profitability due to
intense industry competition.
The ratings reflect VAPL's exposure to intense competition in the
highly fragmented valve industry, susceptibility of its operating
margin to volatility in raw material prices, and below-average
financial risk profile, marked by a small net worth and
constrained debt protection metrics. These rating weaknesses are
partially offset by the extensive experience of the company's
promoters in the valve industry.
Outlook: Stable
CRISIL believes that VAPL will continue to benefit over the medium
term from the extensive industry experience of its promoters. The
outlook may be revised to 'Positive' if the company scales up and
sustains its operations and profitability, leading to higher cash
accruals, and improves its working capital management, while
maintaining its capital structure. Conversely, the outlook may be
revised to 'Negative' if VAPL's financial risk profile weakens
further, most likely because of lower-than-expected cash accruals,
larger-than-expected working capital requirements, or debt-funded
capital expenditure.
Incorporated in 1995, VAPL, based in Chennai (Tamil Nadu), is
engaged in design and assembly of ball valves and pneumatic
actuators.
VAPL reported a profit after tax (PAT) of INR0.33 million on an
operating income of INR221.9 million for 2011-12 (refers to
financial year, April 1 to March 31), as against a PAT of INR4.9
million on an operating income of INR221.9 million for 2010-11.
=================
I N D O N E S I A
=================
ENERGI MEGA: Moody's Assigns B2 CFR with Stable Outlook
-------------------------------------------------------
Moody's Investors Service has assigned a B2 corporate family
rating to Energi Mega Persada Tbk., and removed the provisional
status of the rating after the company's recent divestment of a
10% stake in a major gas field, thus strengthening its liquidity.
Moody's has also withdrawn the provisional (P)B2 rating for the
company's proposed USD notes, to be issued by EMP International
Holdings Pte. Ltd., as no bonds were ever raised.
The rating outlook is stable.
In November 2012, Moody's assigned a provisional corporate family
rating pending the completion of a proposed USD bond issuance
through EMP International Holdings Pte. Ltd. (unrated) aimed at
alleviating pressure on EMP's tight liquidity profile.
While the bond issuance did not materialize, EMP's divestment of
its interest in the gas field has provided sufficient funds to
repay one of its major financing facilities and improve its
liquidity.
Ratings Rationale:
"EMP's financial and liquidity profile has improved following the
divestment of the Masela gas field in Indonesia for $313 million
and repayment of the company's outstanding $200 million term loan
from Credit Suisse," says Simon Wong, a Moody's Vice President and
Senior Credit Officer.
"The remaining proceeds of about $113 million will be earmarked
for working capital and capex requirements," adds Wong, who is
also Lead Analyst for EMP.
The company had been in breach of several operating and financial
covenants of the Credit Suisse term loan since the first drawdown
in 2008. The loan was due to mature in Q3 2013.
While EMP's sale of a 10% stake in the Masela gas field will
reduce its proved (P1) reserves and longer term growth prospects,
it will not have an impact of EMP's production profile in the next
12-18 months. EMP's P1 reserves fell to 116 million from 278
million barrels of oil equivalent (mmboe) following the disposal.
"EMP's debt leverage remains relatively high with adjusted debt to
prove developed reserves of 11-13x for 2013, however Moody's
expect company to fund its ongoing capex with internal sources and
will not incur further debt in the near to medium term," adds
Wong.
However, Moody's would be concerned if EMP makes any debt-funded
acquisitions in the next 12-18 months.
Moody's will also continue to monitor EMP's refinancing plan for
its ONWJ acquisition loan of $262m which matures in Q4 2014.
EMP's planned capex in 2013-15 totals $460 million, in order to
ramp up its production and commercialize its gas reserves. This
level of capex will constrain its ability to generate free cash
flows.
Nonetheless, EMP's B2 rating is supported by its stable cash flows
from producing oil assets and from the medium- to long-term take-
or-pay gas contracts, the latter of which are an increasing
proportion of the company's stable gas revenues.
In addition, EMP's proportion of gas revenues is expected to
increase to 50%-60% between 2013 and 2014, up from 42% in 2012 and
21% in 2011, owing to the successfully negotiation of higher gas
prices for the deliveries from its offshore North West Java (ONWJ)
field, with an average realized price of $5.22/million British
thermal units (mmbtu) in 2012, a 34% increase from a year ago.
Moreover, EMP delivered strong operational performance in 2012,
recording a 126% year-on-year increase in net production to 38.3
thousand barrels of oil equivalents per day (mboepd), primarily
due to ONWJ and Kangean Terang gas field in East Java, which came
online in May 2012.
However, while EMP has strong partners, such as Pertamina
(Persero) (Baa3 stable), Mitsubishi Corporation (A1 stable) and
Japan Petroleum Exploration Co. Ltd. (A2 stable), all of which
operate the ONWJ and Kangean gas fields, EMP's production
concentration risk is high, given that these two gas blocks will
account for 70% of its revenues in the next 3 years.
The stable outlook incorporates Moody's expectation that EMP will
achieve its production growth within budget and to the planned
time frames.
Upward rating pressure is limited but may evolve if the company:
1) succeeds in implementing its expansion plans and ramping up its
production, with a consistent track record of production at the
Kangean and Bentu blocks; and 2) demonstrates consistent positive
free cash flows and materially lower its leverage position.
Financial indicators that Moody's would consider for an upgrade
are if EMP can show on a sustained basis: an adjusted debt/proved
developed reserves of less than $9/boe; adjusted debt/average
daily production below $27,000 or adjusted retained cash flow
(RCF)/debt of more than 30%-35%.
On the other hand, the ratings will be under pressure if EMP fails
to achieve its production targets within the projected costs and
time frames, and if there are ambitious debt-funded acquisitions.
Adjusted debt/proved developed reserves of more than $12/boe,
adjusted debt/average daily production exceeding $30,000 or
RCF/debt of less than 20% on a consistent basis would be
indicative of downward pressure on the rating.
The principal methodology used in this rating was the Global
Independent Exploration and Production Industry published in
December 2011.
EMP is an independent oil & gas exploration and production company
established in 2001. It had total proved reserves of approximately
116 mmboe as of July 2013, and holds working interests in eleven
oil and gas blocks.
As at end-2012, approximately 93.4% of EMP's total proved reserves
consisted of natural gas. Listed on the Indonesia Stock Exchange,
EMP is 7.39% directly owned by PT Bakrie and Brothers Tbk (BNBR,
unrated). The Bakrie family has significant influence over EMP,
through additional shares owned by individual family members and
shareholding interests through corporate affiliates of BNBR.
KAWASAN INDUSTRI: Fitch Upgrades Issuer Default Rating to 'B+'
--------------------------------------------------------------
Fitch Ratings has upgraded Indonesia's township developer, PT
Kawasan Industri Jababeka Tbk's, Long-Term Issuer Default Rating
to 'B+' from 'B'. The Outlook is Stable.
At the same time, Jababeka's USD175 million five-year senior
unsecured notes have also been upgraded to 'B+' from 'B' with a
Recovery Rating of 'RR4'. Fitch has also assigned a senior
unsecured rating of 'B+'.
The upgrade follows the commencement of Jababeka's 130MW gas-fired
power plant (PP1) in January 2013. Power sales are based on a
long-term off-take agreement with PT Perusahan Listrik Negara
(PLN, BBB-/Stable), which will add stability to Jababeka's cash
flow. With the commercial operation of PP1 Fitch expects
Jababeka's recurring EBITDA alone to be adequate to cover its
interest expenses in 2013 and beyond.
KEY RATING DRIVERS
Recurring income boost: Fitch expects KIJA's earnings from the
recently operational PP1, and other recurring sources,
infrastructure management and an inland port facility, to amount
to over 25% of EBITDA from 2013 onwards, up from 7% in 2012. The
agency expects EBITDA from these recurring sources alone to be
adequate to cover its interest expenses in 2013 and beyond.
Recurring EBITDA interest coverage amounted to 0.27x in 2012.
PP1 earnings visibility: Energy sales of PP1 are based on a 20-
year power purchase agreement (PPA) with state-owned PLN. The PPA
incorporates a 100% off-take and a fuel cost pass-through
mechanism. Operations of the power plant have been satisfactory to
date, with generation on average above minimum contracted volumes.
Property development risks: Industrial property development will
continue to be the major source of cash flow generation. Although
the sector is inherently cyclical, the risks are somewhat
mitigated by the current favorable industry dynamics especially in
the Bekasi region where Jababeka's flagship industrial estate is
located. Average land prices in Bekasi have doubled since 2010 and
Fitch expects prices to remain robust as demand continues to
outstrip supply in the region.
Quality land bank: The company's 'Kota Jababeka' is one of the
highest-priced among Indonesian industrial land, due to its
strategic location and auxiliary infrastructure facilities such as
an inland port and a power plant. At end-March 2013 Jababeka
reported about 1,000 hectares of land in this estate which would
be adequate for development over 10 years, based on company sales
estimates. Jababeka also has a 1,500 hectare tourism resort in
Banten.
Scale and potential capex: Jababeka's ratings remain constrained
by its limited operating scale for a property company. This is
because potential investments in infrastructure would be sizable
in relation to the company's cash flows. Fitch expects Jababeka to
generate negative free cash flow (FCF) in 2014 as the company
invests in its second power plant. The rating also factors in the
potential for further large investments in infrastructure post
2015 as it commences development of a new industrial estate in
Central Java.
Liquidity adequate: Fitch expects Jababeka's debt principal and
interest repayments till 2017 to be mostly covered by its
operational cash flows and cash balances. Of the IDR2trn of total
debt outstanding at end-March 2013, about 65% is due in 2017. The
company, however, would require additional funding to expand its
power plants. The company's liquidity is weaker than some of the
higher-rated property developers' as it does not maintain
significant excess cash as liquidity buffer.
RATING SENSITIVITIES
Negative: future developments that could lead to a negative rating
action include:
-- A sustained decrease in Jababeka's recurring EBITDA interest
coverage below 1x. This could be driven by large debt-funded
investments with protracted payback periods
-- A failure to secure long-term funding for capex needs which
could lead to weakening liquidity
Positive: Fitch does not expect positive rating action in the
medium term owing to its small business scale and limited
diversification relative to higher-rated peers and its current
capex intensive activity.
=========
J A P A N
=========
PANASONIC CORP: To Shut Solar Cell Plant in Hungary; Axe 550 Jobs
-----------------------------------------------------------------
The Japan Times reports that Panasonic Corp. will close its solar
cell factory in Hungary next March and lay off around 550 workers,
sources said Friday.
According to the report, sources said the struggling electronics
maker will end production at its only European solar cell factory
in September. This will leave Panasonic with two such factories in
western Japan and one in Malaysia.
The solar energy market in Europe has been flagging and Japanese
solar cell makers have been facing fierce competition there with
Chinese makers. But sales of solar panels in Japan are expected to
grow under a system that obliges electric utilities to purchase
all power generated from renewable sources.
Panasonic is expecting its global sales volume of solar cells to
grow 25 percent from last year to 670,000 kw this year.
Panasonic Corporation, formerly Matsushita Electric Industrial
Co., Ltd. -- http://www.panasonic.co.jp/-- is engaged in the
production and sales of electronic and electric products in an
array of business areas. It offers products, systems and
components for consumer, business and industrial use. Most of
the company's products are marketed under the Panasonic brand
name worldwide, along with other product, or region, specific
brand names, including National primarily for home appliances and
household electric equipment sold in Japan, and Technics for
certain high-fidelity products.
In February, Fitch Ratings put Panasonic Corporation's Long-Term
Foreign- and Local-Currency Issuer Default Ratings (IDR) and local
currency senior unsecured ratings at 'BB', respectively. The
Outlook on the Long-Term IDRs is Negative. Simultaneously,
Panasonic's Short-Term Foreign- and Local-Currency IDRs have been
affirmed at 'B'.
Fitch said the speculative-grade ratings reflect Panasonic's weak
competitiveness in its core businesses, particularly in TVs and
panels, as well as weak cash generation from operations (CFO).
The Negative Outlook reflects the agency's view that the
company's financial profile is not likely to show a material
improvement in the short- to medium-term. Fitch acknowledges that
the company is heading in the right direction with its
restructuring efforts which could potentially lead to margin
recovery over the long-term. However, the company's turnaround
programme remains exposed to execution risk.
====================
N E W Z E A L A N D
====================
ROSS ASSET: Receivers Sell Ross Family Paintings For NZ$199K
------------------------------------------------------------
BusinessDesk reports that the receiver for accused Ponzi scheme
operator David Ross sold about NZ$199,000 of family paintings and
is looking at the family-owned properties as he tries to unravel
the affairs of Ross Asset Management.
BusinessDesk says PwC's John Fisk and Duncan Bridgman have been
appointed to preserve the assets of the Ross family and related
trusts as part of the wider investigation into Ross Asset
Management, and are trying to work out whether investor money from
the fund manager was used to pay for any of the family's
properties, according to their latest report. Ross Asset
Management has a claim of almost NZ$3.5 million against
David Ross and the trusts, BusinessDesk discloses.
According to BusinessDesk, Mr. Ross appeared briefly in the
Wellington District Court on July 5, where hearings on eight
charges under the Crimes and Financial Advisers Act were adjourned
for hearings on Aug 22.
BusinessDesk relates that the receivers' report said the money
raised from the auctioned paintings, which were jointly owned by
David and Jillian Ross, are being held in a trust account, and is
expected to be used to meet their legal costs by the Financial
Markets Authority's investigation.
The Ross receivers are investigating whether any Ross Asset
Management funds were used to buy a Lower Hutt property and a bare
section in Riversdale Beach, and are still trying to work out what
to do with the Ross family home, which was bought before the fund
manager was set up, BusinessDesk relays.
BusinessDesk notes that various share held by the Ross family and
other entities are being looked into, though the receivers aren't
currently taking any action.
In a report on the Ross Asset Management liquidators' committee
meeting last month, PwC's Fisk said investors and creditors are
expected to receive a net NZ$4.2 million as he liquidates the
share portfolio, which is valued at NZ$5.9 million, BusinessDesk
discloses. Some NZ$1.5 million had been realised as of July 4,
with a further NZ$3.7 million to go, and proprietary claims of
NZ$993,000.
As reported in the Troubled Company Reporter-Asia Pacific on
Nov. 8, 2012, the High Court appointed PricewaterhouseCoopers
partners John Fisk and David Bridgman as Receivers and Managers
to Ross Asset Management Limited and nine other associated
entities following application by the Financial Markets
Authority. The associated entities are:
* Bevis Marks Corporation Limited;
* Dagger Nominees Limited;
* McIntosh Asset Management Limited;
* Mercury Asset Management Limited;
* Ross Investment Management Limited;
* Ross Unit Trusts Management Limited;
* United Asset Management Limited;
* Chapman Ross Trust;
* Woburn Ross Trust;
* Ace Investments Limited or Ace Investment Trust Limited or
Ace Investment Trust;
* Vivian Investments Limited; and
* Ross Units Trusts Limited.
The Receivers and Managers have also been appointed to Wellington
investment adviser David Robert Gilmore Ross personally.
Mr. Fisk said they have identified investments of nearly
NZ$450 million held on behalf of more than 900 investors across
1,720 individual accounts.
The High Court in mid-December ordered John Fisk and David
Bridgman be appointed liquidators of these companies:
-- Ross Asset Management Limited (In Receivership);
-- Bevis Marks Corporation Limited (In Receivership);
-- McIntosh Asset Management Limited (In Receivership); and
-- Mercury Asset Management Limited (In Receivership).
STRATEGIC FINANCE: Receivers Complete Settlement Talks w/ Execs
---------------------------------------------------------------
Stuff.co.nz reports that receivers for Strategic Finance have
completed settlement talks with the failed company's directors
over a claim for alleged breaches of the Companies Act.
In the latest receiver's report published on July 5, John Fisk, of
PWC, said there had been "robust and constructive discussion" with
Strategic's directors in an effort to recover money for investors
without incurring the cost of going to court, according to
Stuff.co.nz.
"These negotiations are now effectively complete, subject to the
resolution of certain outstanding matters on an agreed timetable,"
Stuff.co.nz quotes Mr. Fisk as saying.
The report did not say how much money was involved, Stuff.co.nz
relays.
Stuff.co.nz says the receivers did not name the directors involved
in the claim, but those on the board around the time of
Strategic's collapse were New Zealand-based directors Kerry
Finnigan, Graham Jackson, Marc Lindale, Denis Thom and David
Wolfenden, as well as Singapore-based Timothy Rich and Australia-
based John Drabble.
All except Mr. Drabble face a lawsuit from the Financial Markets
Authority for alleged breaches of the Securities Act. The FMA is
in confidential talks with the six men to explore an out-of-court
settlement, Stuff.co.nz relates.
According to Stuff.co.nz, the receivers also said they were
"investigating a separate claim against a third party with whom we
are now also in 'without prejudice' discussions."
It is not clear whether the third party is an auditor or trustee
or an individual, Stuff.co.nz notes.
Mr. Fisk's report said the deadline to conclude a settlement with
directors had been extended while the third party talks
progressed, Stuff.co.nz adds.
About Strategic Finance
Headquartered in Wellington, New Zealand, Strategic Finance
Limited (NZE:SFLHA) -- http://www.strategicfinance.co.nz/--
operated as a specialist finance company offering financial
services, primarily to the property sector. The Company also
provided specialist financial and advisory services to the
property and corporate sectors. The Company operated in
New Zealand, Australia and Pacific Islands. The Company's
operating subsidiaries include Strategic Advisory Limited,
Strategic Nominees Limited, Strategic Mortgages Limited and
Strategic Nominees Australia Limited. The Company's non-
operating subsidiary is Strategic Properties No.1 Limited. In
May 2009, the Company incorporated a subsidiary, Gulf Property
Holdings Limited.
Strategic Finance Limited's parent company, Strategic Investment
Group, was wholly owned by Australian-based finance company Allco
HIT Limited.
The Troubled Company Reporter-Asia Pacific reported on March 15,
2010, that PricewaterhouseCoopers partners John Fisk and Colin
McCloy were appointed receivers of Strategic Finance Limited and
related companies Strategic Advisory Limited, Strategic Mortgages
Limited, Strategic Nominees Limited, and Strategic Nominees
Australia Limited. This ended the moratorium arrangement that
had been in place since December 2008. The companies' trustee,
Perpetual Trust, appointed receivers after SFL failed to generate
sufficient loan recoveries for its milestone repayment on Jan. 7,
2010. The company owed NZ$417 million to 13,000 investors.
Perpetual Trust Ltd., on July 27, 2010, appointed liquidators to
Strategic Finance. The High Court in Wellington made an order
that Corporate Finance's John Cregten and Andrew McKay be
appointed liquidators.
===============
P A K I S T A N
===============
* PAKISTAN: Reaches Agreement with IMF on US$5.3BB EFF Program
--------------------------------------------------------------
An International Monetary Fund (IMF) mission, led by Mr. Jeffrey
Franks, visited Pakistan from June 19 to July 2, 2013 to conduct
the annual Article IV consultation discussions and to hold policy
discussions with the authorities about possible IMF financial
support for the government's reform program under a three-year
Extended Fund Facility (EFF).
At the conclusion of its work July 4, Mr. Franks issued the
following statement:
"The mission has reached a staff-level agreement with the
authorities on the key elements of an economic reform program that
is strongly owned by the authorities and that can be supported by
a 36-month arrangement totaling some US$5.3 billion under the EFF.
This agreement will be reviewed by IMF Management and finalized
before going to the IMF's Executive Board, which would consider
the proposed arrangement in early September 2013, subject to the
timely completion of prior actions to be taken by the authorities.
"Pakistan faces a challenging economic outlook, compounded by an
uncertain global and regional environment. Macroeconomic
imbalances have combined with longstanding structural problems,
particularly in the energy sector, to sap the country's growth
potential. Growth has only averaged 3 percent over the past few
years, well below that needed to provide jobs for the rising labor
force and to reduce poverty. Technical and financial problems in
the energy sector have led to large-scale power outages which have
depressed output and imposed hardship on the public at large. A
difficult business climate has contributed to a sharp fall in
private investment. Weak performance in large public enterprises
in key industries constitutes a drag on the public finances and on
economic growth. Falling capital inflows have been insufficient to
finance even a modest current account deficit, leading to large
reduction in international reserves.
"A determined effort is required to improve medium-term growth and
move toward sustainable fiscal and external positions. This
requires a strong political consensus, in the central government
as well as in the provincial governments, on a medium-term program
of fiscal consolidation anchored on an efficient and equitable tax
system. The 2013/14 budget recently approved by parliament is an
important step in the right direction, and the government has
agreed to complement this with additional steps to achieve a
substantial deficit reduction at the beginning of the program. The
mission and the authorities agreed on the need for a sustained
improvement in tax collections as well as a significant widening
of the tax base and a more equitably shared tax burden, including
through a phase-out of all existing statutory regulatory orders
(SROs) and other measures which grant special rates and tax
exemptions. On the expenditure side, untargeted subsidies that
disproportionately benefit the well-off will be phased-out, while
fully protecting the most vulnerable members of society through
targeted assistance.
"The authorities' program includes a comprehensive strategy for
tackling the country's long standing energy problems through
measures to address the 'circular debt' accumulated in the sector,
tariff rationalization, and promotion of investment for energy
generation and modernization. Such steps would help to mitigate
the hardship of electricity load-shedding, improve the fiscal
balance, and help boost growth. Energy reforms are complemented by
significant structural reforms in the areas of trade, public
sector enterprises, and the business climate to encourage higher
investment. Restructuring and privatization of public enterprises-
including those in the energy sector-are intended to help restore
fiscal stability as well as boosting investor confidence in
Pakistan's future economic prospects and opportunities, leading to
higher growth and job creation.
"Broad-based domestic and international support will be crucial
for the successful implementation of the authorities' planned
policies and reforms. The IMF remains committed to supporting
Pakistan and its people face up to the challenges by providing
financial resources and technical assistance."
=====================
P H I L I P P I N E S
=====================
RURAL BANK OF SAN FERNANDO: Placed under PDIC receivership
----------------------------------------------------------
The Monetary Board (MB) placed the Rural Bank of San Fernando
(Cebu), Inc. under the receivership of the Philippine Deposit
Insurance Corporation (PDIC) by virtue of MB Resolution No. 1087
dated July 4, 2013. As Receiver, PDIC took over the bank on
July 5, 2013.
Rural Bank of San Fernando is a single-unit bank located in San
Fernando, Cebu. Latest available records show that as of
December 31, 2012, Rural Bank of San Fernando had 3,341 accounts
with total deposit liabilities of PHP83.41 million. A total of
3,333 deposit accounts or 99.76% of the accounts have balances of
PHP500,000 or less and fully covered by deposit insurance. Total
insured deposits amounted to PHP76.81 million or 92.09% of the
total deposits.
PDIC said that upon takeover, all bank records shall be gathered,
verified and validated. The state deposit insurer assured
depositors that all valid deposits shall be paid up to the maximum
deposit insurance coverage of PHP500,000.00.
The PDIC also announced that it will conduct a Depositors-
Borrowers Forum on July 10, 2013 to inform depositors of the
requirements and procedures for filing deposit insurance claims.
Claim forms will be distributed during the Forum. The schedule and
venue of the Forum will be posted in the bank premises and in the
PDIC website, www.pdic.gov.ph. The claim forms and the
requirements and procedures for filing are likewise available for
downloading from the PDIC website.
Depositors may update their addresses with the PDIC
representatives at the bank premises or during the Forum using the
Mailing Address Update Forms to be furnished by PDIC
representatives. Duly accomplished Mailing Address Update Forms
should be submitted to PDIC representatives accompanied by a
photo-bearing ID of the depositor with signature. Depositors may
update their addresses until July 12, 2013.
Depositors with valid deposit accounts with balances of
PHP15,000.00 and below need not file deposit insurance claims. But
depositors who have outstanding obligations with the Rural Bank of
San Fernando including co-makers of the obligations, and have
incomplete and/or have not updated their addresses with the bank,
regardless of amount, should file deposit insurance claims.
For depositors that need not file deposit insurance claims, PDIC
targets to start mailing payments to these depositors at their
addresses recorded in the bank no later than July 17, 2013.
For depositors that are required to file deposit insurance claims,
the PDIC targets to start claims settlement operations for these
accounts no later than July 22, 2013. The schedule of the claims
settlement operations will be announced through notices to be
posted in the bank premises and other public places as well as
through the PDIC website, www.pdic.gov.ph.
According to the latest Bank Information Sheet (BIS) as of
December 31, 2010 filed by the Rural Bank of San Fernando with the
PDIC, the bank is majority-owned by Milagros A. Villasor (34.72%),
Guillermo A. Villasor, Jr. (8.37%), Edwin A. Villasor (7.34%),
John Robert A. Villasor (7.15%), Patrick A. Villasor (6.99%),
Catalina T. Cuenco (6.87%), and Josefina T. Cuenco (6.26%). Its
Chairman and President is Milagros A. Villasor.
=================
S I N G A P O R E
=================
FIRST SHIP: S&P Cuts CCR to 'B' & Puts Rating on Creditwatch Neg.
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it had lowered its
long-term corporate credit rating on First Ship Lease Trust (FSL)
to 'B' from 'B+'. S&P also lowered its long-term ASEAN regional
scale rating on the Singapore-based ship leasing trust to 'axB+'
from 'axBB-'. At the same time, S&P placed the ratings on
CreditWatch with negative implications.
"We lowered the ratings and placed them on CreditWatch with
negative implications to reflect the possible adverse impact of a
sudden change in management on FSL's business and relaxation of
covenants," said Standard & Poor's credit analyst Katsuyuki Nakai.
S&P has also revised its assessment of the company's liquidity to
"less than adequate" from "adequate."
On July 4, 2013, FSL announced the resignation of four directors
(including the chairman, CEO, and chief financial officer). In
view of the challenging industry conditions and weakening credit
profile of FSL's lessees, the sudden change in management may
adversely affect the company's business. FSL's lenders are also
likely to review the covenant relaxation, which is conditional on
continuation of the company's management.
S&P revised its liquidity assessment because the company is not in
compliance with its covenants as of June 30, 2013. FSL announced
non-fulfillment of the covenants for minimum debt service coverage
ratio or security value-to-loan ratio, pending final signing by
its lenders. However, S&P currently believes that the covenant
breach may not lead to an acceleration of payment.
"We expect to resolve the CreditWatch after we obtain more
information from FSL on its management plans and the status of the
covenant relaxation, and after we reassess the company's
relationship with lenders," said Mr. Nakai.
FRASERS COMMERCIAL: S&P Affirms & Withdraws 'BB+' CCR Rating
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB+' long-term
corporate credit rating and 'axBBB+' ASEAN regional scale ratings
on Singapore-based Frasers Commercial Trust (FCOT).
S&P subsequently withdrew all the ratings at the company's
request. At the time of the withdrawal, the outlook was stable.
The rating on FCOT, a real estate investment trust, reflected the
company's small portfolio of five assets. As of March 31, 2013,
FCOT's Singapore assets accounted for 61% of total portfolio
value, indicating some asset concentration. FCOT's healthy
occupancy rates of above 95% and fairly long lease maturity
profile of 4.8 years as of March 31, 2013, moderated these
weaknesses. S&P assessed the company's business risk profile as
"fair" and its financial risk profile as "significant."
The stable rating outlook reflected S&P's expectation that FCOT
would maintain stable rentals and profit margins, and sustain its
improved financial profile over the next two years.
===============
X X X X X X X X
===============
* Moody's Outlook on Global Airline Sector Remains Stable
---------------------------------------------------------
Moody's outlook for the global airline industry remains stable,
the rating agency says in a new report. While the slow US economic
recovery and continued weakness in Europe will continue to weigh
on the sector over the next 12 to 18 months, lower fuel costs
should offset soft demand and higher non-fuel operating expenses.
"We expect the global airline industry's operating profits to grow
modestly this year and next," says Vice President -- Senior Credit
Officer Jonathan Root in "Capacity Discipline, Lower Fuel Costs to
Buoy Operating Profits Despite Slowing Demand." "But we do not
anticipate a meaningful expansion in profit margins in this time
frame due to economic headwinds and capacity additions."
Capacity discipline, careful management of non-fuel costs and
ancillary fees will remain the primary tools for carriers as they
seek to achieve their targeted returns, Root says. Moody's expects
industry adjusted operating profit margins of between 4% and 7% in
2013 and 2014, and yield growth to be in the range of -1% to 3% in
2013 and to be flat to 3% in 2014.
US airlines are likely to enjoy better-than-average profitability
over the outlook horizon. Delta, JetBlue, Southwest, United
Airlines, US Airways and American Airlines will be helped by their
conservative capacity management and improved ability to raise
fares when fuel prices rise and tack on additional fees for
checked bags, meals and other items.
In Europe, slow economic recovery will continue to impede the
efforts of low-cost carriers such as Ryan Air and EasyJet to
improve their profit margins. Despite challenging conditions at
home, however, larger carriers such as Deutsche Lufthansa and
International Airlines Group's British Airways should see their
operating profits grow this year.
Elsewhere, both Qantas and Air New Zealand will see their earnings
expand as demand remains steady.
Growth in emerging markets will drive an overall increase in
revenue passenger kilometers, Root says. "In the Middle East, we
expect strong growth in available seat kilometers to lead to gains
in passenger traffic, thanks to increasing trade between the
Middle East and emerging economies in Africa and Asia."
Robust traffic increases are also expected in Asia and Latin
America. Led by strong growth in China and long-haul markets,
Asian carriers are projected to post a 6.3% gain in revenue
passenger kilometers in 2013. And passenger demand among Latin
American carriers is expected to jump 9.8% during the same period,
thanks to brisk trade with Asia and North America.
*********
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
to be reliable, but is not guaranteed.
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 ***