Thursday 5 July 10:40 AM
TEXT-S&P cuts Pasminco to BB-, still on watch
au.dailynews.yahoo.com
(Press release provided by Standard & Poor's Corp)
MELBOURNE, July 5 - Standard & Poor's today lowered its long-term rating on Pasminco Ltd. to double-'B'-minus from double-'B'-plus.
The long-term rating remains on CreditWatch with negative implications where it was placed on July 2, 2001. Pasminco's already subpar credit protection measures, which have weakened due to the historically low zinc price, will be exacerbated further by the uncertain market outlook for zinc in the medium term. Consequently, Pasminco's financial flexibility also has reduced in terms of its debt maturity profile. The company's single-'B' short-term rating is placed on CreditWatch with negative implications.
The rating downgrade and CreditWatch listing reflect the mining company's recent poor profit performance due to weak zinc and lead metals prices; restrictive foreign currency hedge position; and high debt levels arising from the company's growth strategy, principally the acquisition of Savage Resources Ltd. in February 1999; and the development and recent commissioning of the Century zinc/lead mine in Queensland.
In the short term, Pasminco maintains adequate committed undrawn funding lines of about A$110 million; however, the company has a near-term debt maturity profile, with about A$197 million in bank lines maturing by June 2002. The company's first debt maturity falls due in January 2002 for about A$33 million, or US$17 million, and is expected to be serviced by existing cash flow and cash balances.
Subsequent debt maturities relate to bilateral bank facilities, which currently are under renegotiation. The CreditWatch will be resolved on determination of Pasminco's debt refinancing and long-term capital structure. The long-term rating could be lowered further, if the company is unable to achieve a satisfactory debt profile. The short-term rating could be lowered to single-'C', Standard & Poor's said. |
