/raid1/www/Hosts/bankrupt/TCRAP_Public/211224.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
Friday, December 24, 2021, Vol. 24, No. 251
Headlines
A U S T R A L I A
PEPPER SPARKZ 4: Fitch Rates Class F Notes Final 'B'
SUSTAINABLE ORGANIC: First Creditors' Meeting Set for Jan. 5
C H I N A
CHINA AIRCRAFT: Fitch Rates USD3 Billion MTN Programme 'BB+'
CHINA SOUTH CITY: S&P Downgrades ICR to 'B-' on Tight Liquidity
LANZHOU CONSTRUCTION: Fitch Lowers IDRs to 'BB', Outlook Neg.
I N D I A
ARSS INFRASTRUCTURE PROJECTS: Insolvency Resolution Case Summary
BAIBHAV PROPERTIES: Insolvency Resolution Process Case Summary
JAINS & ALLIANCE: Insolvency Resolution Process Case Summary
MAK MEDICALS PRIVATE: Insolvency Resolution Process Case Summary
MEDIRAD TECH INDIA: Insolvency Resolution Process Case Summary
NEW STEEL: Insolvency Resolution Process Case Summary
R.K. STEELS: ICRA Keeps B+ Debt Rating in Not Cooperating
I N D O N E S I A
MEDCO ENERGI: Fitch Places 'B+' LT IDR on Watch Positive
X X X X X X X X
PILBARA RESOURCES: First Creditors' Meeting Set for Dec. 31
- - - - -
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A U S T R A L I A
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PEPPER SPARKZ 4: Fitch Rates Class F Notes Final 'B'
----------------------------------------------------
Fitch Ratings has assigned final ratings to Pepper SPARKZ Trust
No.4's pass-through floating-rate notes. The notes are backed by a
pool of first-ranking Australian automotive and equipment lease and
loan receivables originated by Pepper Asset Finance Pty Limited, a
subsidiary of Pepper Money Limited (Pepper). The notes are issued
by BNY Trust Company of Australia Limited as trustee for Pepper
SPARKZ Trust No.4.
DEBT RATING PRIOR
---- ------ -----
Pepper SPARKZ Trust No.4
A1-a AU3FN0064515 LT AAAsf New Rating AAA(EXP)sf
A1-x AU3FN0064523 LT AAAsf New Rating AAA(EXP)sf
B AU3FN0064531 LT AAsf New Rating AA(EXP)sf
C AU3FN0064549 LT Asf New Rating A(EXP)sf
D AU3FN0064556 LT BBBsf New Rating BBB(EXP)sf
E AU3FN0064564 LT BBsf New Rating BB(EXP)sf
F AU3FN0064572 LT Bsf New Rating B(EXP)sf
G1 LT NRsf New Rating NR(EXP)sf
G2 LT NRsf New Rating NR(EXP)sf
TRANSACTION SUMMARY
The collateral pool at the 31 October cut-off date consisted of
24,657 receivables with a weighted-average (WA) remaining term of
66.4 months. Loans totalled AUD800 million, up from AUD600 million
at the time of expected rating on 15 November 2021.
KEY RATING DRIVERS
Stress Commensurate with Ratings: Fitch has assigned base-case
default expectations as well as 'AAAsf' default multiples for each
risk tier classification. Fitch's base-case gross-loss expectations
are 2.5%, 5.5% and 11.0% for tier A, B and C, respectively, and
'AAAsf' default multiples are 6.00x, 5.25x and 4.50x. The recovery
base case is 33.7%, with a 'AAAsf' recovery haircut of 42.2% across
all risk grades. Credit was given to the government's SME Guarantee
Scheme, which covers 12.3% of the receivables. The WA base-case
default assumption and 'AAAsf' default multiple were 4.4% and 5.6x,
respectively.
The Stable Outlook is supported by Australia's management of the
Covid-19 pandemic, including the nationwide vaccine rollout that is
facilitating the removal of lockdown restrictions. Fitch forecasts
GDP to expand by 4.0% in 2022, with an unemployment rate of 4.4%.
GDP growth is expected to normalise to 2.8% in 2023, with an
unemployment rate of 4.6%.
Excess Spread Supports A1-x Note Issuance: The transaction includes
a class A1-x note to fund the purchase-price component related to
the unamortised commission paid to introducers for the origination
of the receivables. The note will not be collateralised, but will
amortise in line with an amortisation schedule. The note's
repayment limits the availability of excess spread to cover losses,
as it ranks senior in the interest waterfall; above the class B to
F notes. However, the rated notes still pass the cash flow analysis
at their respective rating levels.
Structural Risks Addressed: Potential counterparty risk is
mitigated by documented structural mechanisms that ensure remedial
actions take place should the ratings of the swap providers or
transaction account bank fall below a certain level. Class A to F
notes will receive principal repayments pro rata upon satisfaction
of pro rata conditions. The percentage of credit enhancement (CE)
provided from the G note will thus increase as the A to F notes
amortise.
Fitch's cash flow analysis incorporates the transaction's
structural features and tests each note's robustness by stressing
default and recovery rates, prepayments, interest-rate movements
and default timing.
Low Operational and Servicing Risk: All receivables were originated
by Pepper Asset Finance, which demonstrated adequate capability as
originator, underwriter and servicer. Pepper is not rated by Fitch.
Servicer disruption risk is mitigated by back-up servicing
arrangements. The nominated back-up servicer is BNY Mellon. Fitch
undertook an operational and file review and found that the
operations of the originator and servicer were comparable with
those of other auto and equipment lenders.
The servicer's operations have not been disrupted by the pandemic,
as staff are able to work remotely and have access to the office.
No Residual Value Risk: There is no residual value exposure in this
transaction. However, there is a small exposure to balloon-payment
loans.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A longer pandemic than Fitch expects that leads to
deterioration in macroeconomic fundamentals and consumers'
financial positions in Australia beyond Fitch's baseline
scenario could lead to a downgrade.
-- Unanticipated increases in the frequency of defaults and loss
severity on defaulted receivables could produce loss levels
higher than Fitch's base case, and are likely to result in a
decline in CE and remaining loss-coverage levels available to
the notes. Decreased CE may make certain note ratings
susceptible to negative rating action, depending on the extent
of coverage decline. Hence, Fitch conducts sensitivity
analysis by stressing a transaction's initial base-case
assumptions.
Downgrade Sensitivity
Rating Sensitivity to Increased Default Rates:
-- Note: A1-a / A1-x / B / C / D / E / F;
-- Rating: AAAsf / AAAsf / AAsf / Asf / BBBsf / BBsf / Bsf;
-- Defaults increase 10%: AAAsf / AAAsf / AA-sf / Asf / BBB-sf /
BB-sf / below Bsf;
-- Defaults increase 25%: AAAsf / AAAsf / A+sf / BBB+sf / BB+sf /
B+sf / below Bsf;
-- Defaults increase 50%: AA+sf / AAAsf / A-sf / BBBsf / BBsf /
below Bsf / below Bsf.
Rating Sensitivity to Reduced Recovery Rates:
-- Note: A1-a / A1-x / B / C / D / E / F;
-- Rating: AAAsf / AAAsf / AAsf / Asf / BBBsf / BBsf / Bsf;
-- Recoveries decrease 10%: AAAsf / AAAsf / AAsf / Asf / BBBsf /
BBsf / Bsf;
-- Recoveries decrease 25%: AAAsf / AAAsf / AA-sf / Asf / BBB-sf
/ BBsf / below Bsf;
-- Recoveries decrease 50%: AAAsf / AAAsf / AA-sf / A-sf / BBB-sf
/ BB-sf / below Bsf.
Rating Sensitivity to Increased Defaults and Reduced Recoveries:
Note: A1-a / A1-x / B / C / D / E / F
-- Rating: AAAsf / AAAsf / AAsf / Asf / BBBsf / BBsf / Bsf;
-- Defaults increase 10%/recoveries decrease 10%: AAAsf / AAAsf /
AA-sf / A-sf / BBB-sf / BB-sf / below Bsf;
-- Defaults increase 25%/recoveries decrease 25%: AAAsf / AAAsf /
Asf / BBB+sf / BB+sf / Bsf / below Bsf;
-- Defaults increase 50%/recoveries decrease 50%: AAsf / AAAsf /
BBB+sf / BBB-sf / BB-sf / below Bsf / below Bsf.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- An upgrade could result from macroeconomic conditions, loan
performance and credit losses that are better than Fitch's
baseline scenario or sufficient build-up of CE that would
fully compensate for credit losses and cash flow stresses
commensurate with higher rating scenarios, all else being
equal.
The A1-a and A1-x notes are at 'AAAsf', which is the highest level
on Fitch's scale. The ratings cannot be upgraded and upgrade
sensitivity stresses are not relevant. Sensitivity stress results
for the remaining rated notes are as follows:
Upgrade Sensitivity
Rating Sensitivity to Reduced Defaults and Increased Recoveries:
-- Note: B / C / D / E / F;
-- Rating: AAsf / Asf / BBBsf / BBsf / Bsf;
-- Defaults decrease 10%/recoveries increase 10%: AA+sf / A+sf /
BBB+sf / BB+sf / B+sf.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Structured Finance
transactions have a best-case rating upgrade scenario (defined as
the 99th percentile of rating transitions, measured in a positive
direction) of seven notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of seven notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings
are based on historical performance.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch sought to receive a third-party assessment conducted on the
asset portfolio information, but none was available for this
transaction.
As part of its ongoing monitoring, Fitch reviewed a small targeted
sample of the originator's origination files and found the
information contained in the reviewed files to be adequately
consistent with the originator's policies and practices and the
other information provided to the agency about the asset
portfolio.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
SUSTAINABLE ORGANIC: First Creditors' Meeting Set for Jan. 5
------------------------------------------------------------
A first meeting of the creditors in the proceedings of Sustainable
Organic Solutions Pty Ltd, trading as SOSBIO, will be held on
Jan. 5, 2022, at 11:00 a.m. via Zoom teleconference facilities.
Domenico Alessandro Calabretta of Mackay Goodwin was appointed as
administrator of Sustainable Organic on Dec. 22, 2021.
=========
C H I N A
=========
CHINA AIRCRAFT: Fitch Rates USD3 Billion MTN Programme 'BB+'
------------------------------------------------------------
Fitch Ratings has assigned China Aircraft Leasing Group Holdings
Limited's (CALC, BB+/Stable) USD3 billion medium-tern note (MTN)
programme at 'BB+' rating. Fitch has also assigned a 'BB+(EXP)'
expected rating to the proposed senior unsecured US-dollar bonds to
be issued by CALC Bonds Limited under the programme. The MTN
programme is guaranteed by CALC.
CALC Bonds Limited, registered in the British Virgin Islands, is a
wholly owned SPV of CALC. The programme and the proposed notes will
be listed on the Hong Kong Stock Exchange. Note proceeds will be
used for aircraft acquisitions, business expansion in aircraft and
related segments, refinancing and for general corporate purposes.
The maturity structure of the proposed notes will be finalised upon
settlement.
The final rating is contingent upon the receipt of final documents
conforming to information already received.
KEY RATING DRIVERS
The ratings assigned to the MTN programme and the proposed senior
unsecured bonds are in line with CALC's Long-Term Issuer Default
Rating (IDR), as the proposed bonds will be unconditionally and
irrevocably guaranteed by CALC, and will at all times rank at least
equally with all of CALC's other present and future unsecured and
unsubordinated obligations. The programme rating reflects the
ratings that Fitch expects to assign to senior notes issued under
the programme.
CALC's IDR is based on a two notch uplift from its standalone
credit profile of 'BB-', reflecting Fitch's expectation of modest
support from state-owned China Everbright Group (CEG) and the
affiliated entities within the group, including China Everbright
Bank Company Limited (BBB/Stable).
Fitch believes CALC has a limited degree of strategic importance to
CEG due to limited shareholding control, a lack of common branding
and complexities associated with legal commitments to CALC spanning
across CEG and China Everbright Limited (CEL, BBB/Stable).
This is somewhat offset by the strong linkage between CEG and CALC,
the importance of CALC's operations to CEG's 'Four-Three-Three'
development strategy, which includes the objective of cultivating a
world-leading aircraft lessor, and CEG's strong operational and
managerial control over CALC, with a record of providing ordinary
funding and liquidity support to CALC.
Fitch's assessment of CALC's standalone credit profile reflects a
smaller scale, higher leverage, and greater lessee and geographic
concentration relative to higher-rated peers, as well as
significant financing and refinancing needs related to a large
order book and substantial debt maturities in the next two to three
years. This is mitigated by the company's quality fleet and limited
exposure to troubled airlines, adequate liquidity as well as
resilient air traffic in China. CALC's leverage - measured by
debt/tangible equity - is high, ranging between 9.0x and 10.0x from
2017 to 2020. Factoring in the upcoming bond, Fitch expects 1H21
reported leverage of 9.0x may increase slightly, but should remain
below 9.5x.
See Fitch Assigns First-Time 'BB+' to China Aircraft Leasing Group;
Outlook Stable for further information on the drivers and
sensitivities of CALC's IDR.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- The ratings on the MTN programme and the proposed notes will
move in tandem with any changes to CALC's rating. The ratings
could be downgraded if there is a worsening of the structural
subordination that causes the recovery on the senior unsecured
debt to decline. This could arise from a high level of
encumbered assets or a change in the mix of funding between
onshore and offshore entities.
-- CALC's rating would be downgraded if Fitch assesses a
weakening in its standalone credit profile. This could arise
from a deterioration in asset performance; heightened risk
appetite for growth beyond Fitch's expectations; leverage in
excess of 10x for a sustained period; unsecured funding
falling below 50%; or reduced liquidity relative to debt
maturities and order book commitments.
-- CALC's rating is sensitive to its linkage with CEG and Fitch's
assessment of CEG's credit profile. A weakening in the linkage
between CEG and CALC, such as a dilution in ownership or
control; or a reduction in CALC's strategic role to CEG; or
reduced liquidity support from CEG and its affiliates would
lead to a downgrade.
-- CALC's IDR is also sensitive to materially adverse
developments with respect to the coronavirus pandemic,
particularly if they have an outsized impact on China, CEG,
CEL or CALC.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- The ratings of the MTN programme and the proposed notes are
equalised with CALC's IDR. The IDR could be upgraded if
Fitch's assessment of CALC's standalone credit profile
improves. This could arise from a decrease in leverage to
below 5.0x on a sustained basis without deterioration in asset
quality and profitability, coupled with strengthened funding
and liquidity relative to its financing needs.
-- Strengthened linkages between CALC and CEG could be positive
for the rating. This could arise from more explicit legal ties
between CALC and CEG, or a meaningful increase in CEG's
shareholding and control through board representation in CALC.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
CHINA SOUTH CITY: S&P Downgrades ICR to 'B-' on Tight Liquidity
---------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
China South City Holdings Ltd. (CSC) to 'B-' from 'B'. S&P also
lowered its long-term issue rating on the company's outstanding
U.S. dollar senior notes to 'CCC+' from 'B-'.
The negative outlook reflects S&P's expectation that CSC's
liquidity will remain tight if the company fails to execute its
plans in a timely manner.
S&P subsequently withdrew its ratings on CSC at the company's
request.
The downgrade reflects S&P's view that CSC's liquidity will remain
weak amid operating and financial challenges. The company repaid
two offshore maturities in August and September this year. Even so,
it still has three significant offshore maturities in February,
June, and November 2022 totaling US$970 million (about HK$7.5
billion). These maturities accounted for about 20% of CSC's total
debt as of Sept. 30, 2021.
The company may rely more on asset disposals and obtaining
additional onshore bank funding to improve its liquidity for
addressing its offshore maturities. This is because S&P believes it
remains very unlikely for CSC to issue new offshore debt for
refinancing, given the offshore capital market is shut down for
most developers. Tough industry conditions have also constrained
CSC's ability to replenish liquidity from sales inflow.
Continued funding access from onshore creditors will remain a key
liquidity support for CSC. S&P believes the company has some record
of maintaining relationships with domestic banks. Its domestic
secured loans increased considerably by 18% to HK$21.5 billion as
of Sept. 30, 2021, from HK$18.2 billion as of March 31, 2021, which
largely helped it to replenish liquidity. These loans gave CSC some
flexibility to use internal resources to repay its two offshore
maturities totaling about HK$4.0 billion in August and September
2021. Continued funding access from banks will also remain vital
for CSC's liquidity. The company still has room to access
additional bank financing with its undrawn but uncommitted bank
credit lines. The company is also in the process of applying for
new bank lines by pledging its sizable, unencumbered investment
properties.
CSC also has domestic bond maturities of Chinese renminbi (RMB) 600
million due April 2022 and RMB1.4 billion due August 2022. S&P
believes that onshore bond investors have shown willingness to
support the company, given they did not exercise the put options on
the bonds earlier in 2021. CSC is also in talks with major
investors on potential onshore bond refinancing in 2022.
S&P said, "We believe CSC remains committed to carrying through its
asset disposal plans, although execution risks remain. The company
is already in advanced negotiations to monetize some of its
non-property development assets, including property management
services business, warehouse assets, and the commercial land bank
in Xi'An. But some proposals are progressing slower than we
previously expected. We attribute the delay to potential buyers'
increasing scrutiny of large asset sales as funding conditions
remain tight. Still, the potential proceeds from the planned
disposals could be significant and could improve the company's
liquidity meaningfully." That said, uncertainties surround the
timely execution of these proposals and the CSC may not receive the
disposal proceeds in time for its upcoming maturities.
"We still expect CSC to be able to manage its bond maturities over
the next 12 months. Despite recent hiccups, the company has already
completed some asset disposals and is due to receive some proceeds
over the next one to two months. The company also drew down
incremental new loans in October and November 2021. In addition, we
believe a large portion of CSC's unrestricted cash and time deposit
balance of HK$6.6 billion as of Sept. 30, 2021, should be
accessible for debt repayment, given CSC fully owns and controls
its eight project companies. We believe CSC's own cash should
sufficiently cover its three 2022 offshore maturities." That said,
the company will likely continue its asset disposal plans and
obtain additional bank financing to shore up liquidity to avoid
running down its cash buffer.
Slowing sales will hamper a significant improvement in CSC's
liquidity. The company's contracted sales fell 31% year on year
from July to September 2021. It plans to launch more saleable
resources of commercial properties, such as multipurpose commercial
properties ("gongyu" apartments) and trade center units, to make up
for falling residential sales. However, in S&P's view, these
commercial properties are susceptible to weakening investment
demand because they mostly cater to investors rather than
owner-occupiers, and will likely have worse sales prospects than
residential products.
S&P said, "We now forecast CSC's contracted sales to decline by 10%
in fiscal 2022 (year ending March 31, 2022), and a further 7%-9% in
fiscal 2023. We do not project a steeper decline in sales because
we believe CSC will proactively cut prices in order to drive
sales." Also, the company has competitive land costs and gross
margin of over 30%, which is higher than many peers. These two
advantages should offer some room for price cuts before hurting the
company's profitability substantially.
At the time of withdrawal, the negative outlook reflected S&P's
view that CSC's liquidity would remain tight over the next 12
months, due to difficulties in offshore refinancing and a slowdown
in contracted sales. The company's liquidity could further weaken
if it failed to execute its refinancing plans such as asset
disposals in a timely manner.
LANZHOU CONSTRUCTION: Fitch Lowers IDRs to 'BB', Outlook Neg.
-------------------------------------------------------------
Fitch Ratings has downgraded China-based Lanzhou Construction
Investment (Holding) Group Co., Ltd.'s (LZJT) Long-Term Foreign-
and Local-Currency Issuer Default Ratings (IDR) to 'BB' from 'BB+'.
The Outlook is Negative. The rating on the USD300 million 4.15%
senior unsecured notes due 15 November 2022, issued by City
Development Company of Lan Zhou and guaranteed by LZJT, has also
been downgraded to 'BB' from 'BB+'.
The downgrade and Negative Outlook reflect decreasing financial
flexibility and uncertainty over LZJT's refinancing of concentrated
onshore debt maturities up until March 2022, in light of capital
market volatility and tight funding conditions. LZJT will need to
repay the debt with largely government-arranged funding if market
access remains restricted. The Outlook also factors in the
uncertainty over the timing and amount of fiscal and financial
resources the Lanzhou municipal government will mobilise for LZJT.
KEY RATING DRIVERS
Maturity Concentration: LZJT has around CNY10.5 billion debt
maturing or becoming puttable up until March 2022, including a CNY2
billion onshore private placement note (PPN) due January 2022 and a
CNY500 million PPN puttable in January 2022. Fitch estimates that
LZJT has very limited available cash balance or operating cash flow
to cover the debt repayments.
Limited Access to Market Funding: LZJT's access to onshore and
offshore bond markets appears limited, despite issuing CNY500
million of 180-day short-term commercial paper in November 2021.
Fitch expects the company will find it challenging to issue or
fully refinance maturing debt under current market conditions.
Fitch has reassessed the financial implications of default to
'Moderate' from 'Strong' on the maturity concentration and limited
market access.
Uncertainty of Government Support: The government has strong
incentive to ensure the timely repayment of the debt as LZJT is the
city's core policy government-related entity (GRE). LZJT says the
government has mobilised fiscal and financial resources for its
debt repayment, including direct fiscal fund appropriation, a
bail-out fund with an initial size of CNY3 billion, injection of
land use rights and asset disposal.
However, the company still lacks the funding and these government
actions are subject to execution risk and lack transparency.
Therefore, Fitch's assessment of the support record remains at
'Moderate'.
'Very Strong' Status, Ownership and Control: LZJT is ultimately
owned and controlled by Lanzhou's State-owned Assets Supervision
and Administration Commission via nominal shareholder Lanzhou
Investment (Holdings) Group Co., Ltd. The government maintains
control and oversight of LZJT's management appointments and
operations.
'Moderate' Socio-Political Implications of Default: LZJT
consolidates and manages a wide range of policy businesses
essential to public welfare, including water, gas and heating
supply, public transport, strategic grain and oil reserves, social
housing and urban development. The municipality places high
political priority on LZJT's businesses, which means the company is
likely to be mandated to continue providing essential public
services even after a default.
Standalone Credit Profile (SCP) of 'b-': The SCP mainly reflects
Fitch's negative assessment on LZJT's liquidity profile due to
limited market access and asymmetric risk considerations on debt
structure and contingent liabilities, with maturity concentration
in the short to medium term.
DERIVATION SUMMARY
LZJT's ratings are assessed under Fitch's Government-Related
Entities Rating Criteria, reflecting 'Very Strong' state ownership
and control, 'Moderate' support record and socio-political
implications of default, as well as 'Moderate' financial
implications of default. The SCP is assessed under Fitch's Public
Sector, Revenue-Supported Entities Rating Criteria.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- The Outlook may be revised to Stable if the negative
sensitivities are not met.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Deterioration in market funding access and government support;
-- Deterioration in Fitch's perception of the Lanzhou
government's ability to provide subsidies, grants or other
legitimate resources allowed under policies and regulations;
-- A weakening of socio-political and financial implications of a
default by LZJT and support by the government, or a dilution
of the government's control in the company.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
ISSUER PROFILE
LZJT was established in 2016 by the Lanzhou government in
north-west China as a policy GRE. The government has injected
assets and equity into LZJT, the major municipal platform for urban
development that also provides essential public services and
operates key state assets.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
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I N D I A
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ARSS INFRASTRUCTURE PROJECTS: Insolvency Resolution Case Summary
----------------------------------------------------------------
Debtor: ARSS Infrastructure Projects Limited
Plot No. 38, Sector A
Zone Dmancheswar Indl Estate
BBSR Khurda OR 751010
IN
Insolvency Commencement Date: November 30, 2021
Court: National Company Law Tribunal, Kolkata Bench
Estimated date of closure of
insolvency resolution process: May 31, 2022
(180 days from commencement)
Insolvency professional: Mr. Uday Narayan Mitra
Interim Resolution
Professional: Mr. Uday Narayan Mitra
72/1, Dawnagazi Road
Bally, Howrah
West Bengal 711201
E-mail: udaynarayanmitra@yahoo.co.uk
cirp.arssinfra@gmail.com
Mobile: 94335-32994/8240850244
Last date for
submission of claims: December 16, 2021
BAIBHAV PROPERTIES: Insolvency Resolution Process Case Summary
--------------------------------------------------------------
Debtor: Baibhav Properties Private Limited
Plot No. 717
BJB Nagar Bhubaneswar
Odisha 751014
E-mail: bjb9337@gmail.com
Insolvency Commencement Date: November 30, 2021
Court: National Company Law Tribunal, Bhubaneswar Bench
Estimated date of closure of
insolvency resolution process: May 28, 2022
(180 days from commencement)
Insolvency professional: Surya Kanta Satapathy
Interim Resolution
Professional: Surya Kanta Satapathy
MMS Chambers, Room No. 1-2
4A, House Street
Kolkata 700001
E-mail: suryakantasatapathy@yahoo.co.in
- and -
Satapathy & Co.
A/353, Ground Floor
Saheed Nagar, ZICA Building
Bhubaneswar 751007
E-mail: cirp.baibhav@gmail.com
Last date for
submission of claims: December 14, 2021
JAINS & ALLIANCE: Insolvency Resolution Process Case Summary
------------------------------------------------------------
Debtor: Jains & Alliance Palms Venture Private Limited
Site No. 286 & 287
Sidihosakote, Surajakanhalli
Haregadde Post, Anekal
Bangalore 562106
Insolvency Commencement Date: November 30, 2021
Court: National Company Law Tribunal, Bengaluru Bench
Estimated date of closure of
insolvency resolution process: May 29, 2022
(180 days from commencement)
Insolvency professional: Kanekal Chandrasekhar
Interim Resolution
Professional: Kanekal Chandrasekhar
No. 6, Shree, 9th Cross
Bhuvaneshwari Nagar
Hebbal Kempapura
H.A. Farm Post
Bengaluru 560024
E-mail: kanekal.chandru@gmail.com
Last date for
submission of claims: December 15, 2021
MAK MEDICALS PRIVATE: Insolvency Resolution Process Case Summary
----------------------------------------------------------------
Debtor: Mak Medicals Private Limited
4270, Pocket-B5/6
Vasant Kunj
New Delhi 110070
Insolvency Commencement Date: November 30, 2021
Court: National Company Law Tribunal, New Delhi Bench
Estimated date of closure of
insolvency resolution process: May 29, 2022
Insolvency professional: Mr. Hemanti Sethi
Interim Resolution
Professional: Mr. Hemanti Sethi
Block No. IB, House No. 8-C
Ashok Vihar-1
Opp. Sports Complex
North West, NCT
Delhi 110052
E-mail: hemantmlsethi60@gmail.com
- and -
AAA Insolvency Professionals LLP
E-10A, Kailash Colony
New Delhi 110048
E-mail: makmedicals@aaainsolvency.com
Last date for
submission of claims: December 21, 2021
MEDIRAD TECH INDIA: Insolvency Resolution Process Case Summary
--------------------------------------------------------------
Debtor: Medirad Tech India Limited
D-155, Sarita Vihar
New Delhi 110076
Insolvency Commencement Date: December 8, 2021
Court: National Company Law Tribunal, Bhubaneswar Bench
Estimated date of closure of
insolvency resolution process: June 6, 2022
Insolvency professional: Siba Kumar Mohapatra
Interim Resolution
Professional: Siba Kumar Mohapatra
Flat No. E/402, Baishnav Vihar
Bomikhal, Near Durga Mandap
Bhubaneswar 751010
E-mail: sibmohapatra@yahoo.co.in
Last date for
submission of claims: December 22, 2021
NEW STEEL: Insolvency Resolution Process Case Summary
-----------------------------------------------------
Debtor: New Steel Trading Private Limited
304, Arihant Iron Market
Ahmedabad Street
Masjid East
Mumbai 400009
Insolvency Commencement Date: December 16, 2021
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: June 14, 2022
Insolvency professional: Manoj Kumar Jain
Interim Resolution
Professional: Manoj Kumar Jain
11, Friends Union Premises CSL
2nd Floor, 227, P. D'Mello Road
Opp. St. George Hospital
Mumbai 400001, Maharashtra
E-mail: manojj2102@gmail.com
Last date for
submission of claims: January 5, 2022
R.K. STEELS: ICRA Keeps B+ Debt Rating in Not Cooperating
---------------------------------------------------------
ICRA has retained the ratings for the bank facilities of R.K.
Steels in the ‘Issuer Not Cooperating’ category. The rating is
denoted as “[ICRA]B+(Stable); ISSUER NOT COOPERATING”.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 55.00 [ICRA]B+(Stable); ISSUER NOT
Fund Based- COOPERATING; Rating Continues
Cash Credit to remain under issuer not
cooperating category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity’s management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers’ performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
The rating action has been taken in accordance with ICRA’s policy
in respect of non-cooperation by a rated entity available at
www.icra.in.
RKS began operations in 1983 as a partnership firm dealing in
trading of long products. Since then the firm has added several
products to its portfolio and is now engaged in trading of a
variety of long and flat steel products in and around Jaipur. It is
managed by Mr. Kailash Chand Agarwal and Mr. Ramesh Chand Agarwal,
acting as equal partners.
=================
I N D O N E S I A
=================
MEDCO ENERGI: Fitch Places 'B+' LT IDR on Watch Positive
--------------------------------------------------------
Fitch Ratings has placed the 'B+' Long-Term Issuer Default Rating
(IDR) of PT Medco Energi Internasional Tbk (Medco) on Rating Watch
Positive (RWP). Fitch has also placed the 'B+' rating on the
company's outstanding senior unsecured US dollar notes on RWP. The
Recovery Rating is 'RR4'.
The RWP follows Medco's announcement of signing a conditional sales
and purchase agreement to acquire ConocoPhillips Indonesia Holding
Ltd (CIHL), which holds a 54% working interest in the Corridor
Block production sharing contract (PSC), an operating asset in
South Sumatra, and a 35% interest in Transasia Pipeline Company Pvt
Ltd. Fitch views the transaction as credit-accretive, as the
acquisition will add an average of about 45 thousand barrels of oil
equivalent per day (mboepd) to Medco's existing production of
100mboepd while almost doubling the proportion of fixed-price
contracts.
Fitch expects Medco's financial profile to remain robust given
Fitch's oil price assumptions, even though about 63% of the
acquisition cost will be funded by debt and remaining through
equity in the form of internal cash and a proposed equity raising
of up to USD200 million. Fitch expects EBITDA from fixed-price
contracts after the acquisition to be about 3x Medco's interest
expenses, significantly higher than the around 1x previously.
However, the acquisition will further weaken Medco's reserve
profile, with proved (1P) reserves falling below six years (around
seven years pre-acquisition) based on 2020 production.
Resolution of the RWP is contingent on the successful completion of
the transaction, which the company expects to occur in March 2022,
subject to meeting certain conditions and shareholder approvals.
Positive rating action may arise if Medco presents an achievable
plan to increase its proved reserve life while maintaining its
financial strength.
KEY RATING DRIVERS
Acquisition to Improve Metrics: Fitch expects Corridor Block PSC to
contribute annual EBITDA of above USD400 million until 2023 (around
USD250 million after 2023), which will help improve Medco's credit
metrics relative to the USD850 million of debt added to fund the
purchase. Fitch expects Medco's net leverage (net debt/EBITDA) to
fall from above 4.0x at end-2020 and stay at about 2x
post-acquisition, even considering a drop in CIHL's working
interest in Corridor Block PSC to 46% after 2023. Fitch excludes
Medco's fully owned subsidiary, PT Medco Power Indonesia (MPI),
when calculating leverage.
Additional Cash Flows Cover Maturities: Medco recently issued
USD400 million of US dollar notes and secured a two-year amortising
bank loan of USD450 million to fund the debt portion for the
acquisition of CIHL. For the next two years, Medco's main debt
maturity will be the amortising bank loan and based on Fitch's
estimate, Medco can cover this via Corridor Block PSC's cash
flows.
Operating Profile to Strengthen: Corridor Block PSC produces mainly
gas, and will raise the share of gas in Medco's output to 75% from
60% now. Almost all the gas from Corridor Block is sold via
fixed-price, long-term take-or-pay contracts with strong
counterparties like PT Perusahaan Gas Negara Tbk (BBB-/Stable), PT
Pertamina (Persero) (BBB/Stable) and Gas Supply Pte Ltd, which will
enhance Medco's earnings visibility. Medco has a larger scale and
more-favourable earnings mix via fixed-price contracts than most
'B' category upstream oil and gas producers. The acquisition will
bolster this position.
Fitch expects Medco's low cash-cost position to improve with the
acquisition of Corridor Block PSC, which has a cash cost position
of USD4 to USD5 per barrel of oil equivalent (boe), lower than
Medco's current cash cost of around USD9/boe.
Relatively Short Proved Reserve Life: Fitch expects Medco's pro
forma 1P reserve life to fall below six years after the
acquisition. Corridor Block PSC is estimated to have less than five
years of 1P reserve life. This will entail higher investments for
Medco over the medium term to improve its reserve life. However, a
high proportion of developed reserves (85% of 1P reserves) should
provide flexibility during oil price downturns.
Medco expects that the recent extension of the PSC for its
Senoro-Toili working area and expected final investment decision on
Senoro phase-2 by early 2023 to add to its reserve base. The
planned capex on Senoro phase-2 is already included in Fitch's base
case. Fitch also expects more visibility on the reserve
replenishment plan at Corridor Block PSC after renewal of its gas
sale and purchase agreements (GSPAs).
GSPA Renewal and Integration: GSPAs for Corridor Block PSC expire
in 2023. While Fitch believes there are minimal risks to volumes
from renewals considering the importance of the block to
Indonesia's domestic gas, price risks remain. Further there are
risks to integration considering the size of Corridor Block PSC
relative to Medco's existing operations. However, the transfer of
most existing key personnel at Corridor Block PSC as part of the
acquisition and Medco's record in integrating the Ophir assets in
2019 mitigate the risks.
Power Investment Neutral: Fitch considers the risk dynamics of MPI
to be neutral to Medco's credit profile, as its investment in the
power company falls outside the restricted group structure defined
in Medco's bond documentation. The documents limit Medco's
investments outside the restricted group to USD300 million, most of
which has been utilised. The structure limits cash outflow from
Medco to MPI and other investments outside the restricted group.
There are no cross-default clauses linking MPI's debt to Medco.
DERIVATION SUMMARY
The RWP reflects Fitch's expectation that Medco's business profile
will improve following the proposed acquisition, with significant
increase in fixed-price contracts in the sales mix, and a larger
production and earnings scale compared with exploration and
production peers in the 'B' rating category.
Canacol Energy Ltd.'s (BB-/Positive) rating reflects that around
80% of its sales volume is from the long-term, fixed-price
take-or-pay gas sales contracts. The proportion of fixed-price
contract sales in Medco's portfolio will increase to around 60%
after the acquisition, though it will remain less than Canacol's.
This would be partly offset by Medco's much larger production scale
and EBITDA generation compared to Canacol. Both the companies have
a moderate P1 reserve life at around six years. The Positive
Outlook on Canacol's rating reflects Fitch's expectation that
Canacol's production scale would increase to around 40mboepd by
2022.
GeoPark Limited (GeoPark; B+/Stable) and Medco have limited
geographic diversification and moderate reserve lives. Medco's
profile, however, benefits from a much-larger production scale and
presence of fixed-price contracts, which are well reflected in the
RWP on its rating.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Brent prices of USD70 a barrel in 2022, USD60 a barrel in 2023
and USD53 a barrel thereafter, as per Fitch's oil and gas
price deck. Gas prices in line with the fixed-price contracts
where applicable. See Near-Term Oil & Gas Prices Raised, Long-
Term Oil Price Unchanged, dated 7 December 2021;
-- Total production volume (including Corridor Block PSC) of
above 150mboepd until 2023 and drop slightly thereafter due to
decline in working interest in Corridor Block PSC;
-- Cash production costs of less than USD8 per boe;
-- Annual capex between USD250 million and USD300 million over
the next five years;
-- Rights offering of USD150 million in 2022 to partly fund the
acquisition.
Fitch's Key Assumptions for Recovery Analysis:
The recovery analysis assumes that Medco would be reorganised as a
going concern in bankruptcy rather than liquidated.
Fitch assumes a 10% administrative claim.
Medco's post-acquisition going-concern EBITDA, excluding MPI, is
based on the average EBITDA Fitch expects over 2022 to 2025, which
is stressed by 30% to reflect the risks associated with oil-price
volatility, potential challenges in maintaining output from its
maturing fields and other factors.
An enterprise value multiple of 5x is used to calculate a
post-reorganisation valuation and reflects a mid-cycle multiple for
oil and gas, metals and mining companies globally, which is higher
than the observed lowest multiple of 4.5x. The higher multiple
reflects that a sizeable proportion of Medco's (post-acquisition)
production volume will stem from long-term fixed-price and indexed
take-or-pay gas contracts, which provide more cash-flow visibility
across economic cycles than the average global upstream oil and gas
production company.
Fitch assumes prior-ranking debt of USD179 million will be repaid
before Medco's senior unsecured creditors, including investors in
its US dollar bonds. Prior-ranking debt includes project-finance
debt at non-guarantor subsidiaries, PT Medco E&P Tomori Sulawesi
and PT Medco E&P Malaka.
The payment waterfall results in a recovery rate corresponding to a
'RR1' Recovery Rating for the unsecured notes. However, Fitch rates
the senior unsecured bonds at 'B+'/'RR4' because Indonesia falls
into Group D of creditor friendliness under Fitch's
Country-Specific Treatment of Recovery Ratings Criteria, and the
Recovery Rating on instruments of issuers with assets in this group
are subject to a cap of 'RR4'.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Successful completion of the acquisition as proposed while
maintaining leverage (net debt/EBITDA excluding MPI) below
2.5x and a proved reserve life of 7 years.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- Medco's rating will be affirmed if the proposed transaction is
unsuccessful.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: At end-June 2021, Medco, excluding MPI, had
unrestricted cash of USD306 million compared with USD61 million of
debt maturing in 2H21. Medco has US dollar bonds of between USD400
million and USD650 million falling due each year from 2025 to 2028.
Medco also has a recent history of refinancing bond maturities well
ahead of schedule. Fitch expects Medco (post-acquisition) to
broadly generate positive free cash flows, and have the flexibility
to curtail capex if needed, which would help its liquidity
profile.
ISSUER PROFILE
Medco is an Indonesian upstream oil and gas company, with some
international presence. The company produces about 90mboepd of oil
and gas.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
===============
X X X X X X X X
===============
PILBARA RESOURCES: First Creditors' Meeting Set for Dec. 31
-----------------------------------------------------------
A first meeting of the creditors in the proceedings of Pilbara
Resource Group Pty. Ltd. will be held on Dec. 31, 2021, at 11:00
a.m. via virtual meeting technology.
Cameron Shaw and Richard Albarran of Hall Chadwick were appointed
as administrators of Pilbara Resource on Dec. 17, 2021.
*********
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.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2021. 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-
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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.
*** End of Transmission ***