S&P affirms Ranhill credit rating
SINGAPORE: Standard & Poor's Rating Services has affirmed the 'B' corporate credit rating on Malaysia-based Ranhill Bhd and removed it from CreditWatch with negative implications. The outlook is negative.
The international ratings agency said in a statement on Wednesday that the 'B-' issue rating on Ranhill's US$220 million senior unsecured notes was also affirmed and removed from Creditwatch with negative implications.
The ratings were placed on CreditWatch on Sept 2, 2008, after the diversified group's announcement of its fiscal 2008 results, which was significantly worse than expected.
"Ranhill continues to be exposed to project-related risks, with several projects facing completion delays and culminating in the recent provisioning in fiscal 2008," said Standard & Poor's credit analyst Andrew Wong.
Ranhill management had stated it will continue to work on improving future profitability in its engineering & construction (E&C) business.
"However, we understand that these are yet to translate into formal agreements. Standard & Poor's considers the formalization of improved contractual arrangements to be critical in improving cash flow from these projects and reducing potential strain on liquidity," Wong said. Ranhill's actions to focus on existing core operations and projects help mitigate the project risks.
It provides some clarity to the group's future business strategy and investment outlays.
Standard & Poor's said it expected that Ranhill will continue to focus on its existing projects and limit further exposure to challenging operating environments.
"Containment of these risks is vital, given Ranhill's highly leveraged financial risk profile," Wong noted.
"Any deviation from our expectations, further cost overruns, or project delays in E&C is likely to place additional stress on the weak financial profile of the company and put pressure on its rating," he said.
http://biz.thestar.com.my/news/story.asp?file=/2008/12/10/business/20081210121514&sec=business
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