qd on parle endettement de vedanta : Vedanta 'BB' Rating, ou
Posté: Mar 15 Fév 2011 09:48S&P affirms Vedanta 'BB' Rating, outlook negative; Rates Loans 'BB'
India Infoline News Service / 10:25 , Feb 15, 2011
The outlook is negative. We removed the rating from CreditWatch, where it was placed with negative implications on Aug. 17, 2010.
Standard & Poor's Ratings Services said today that it had affirmed its long-term foreign currency corporate credit rating on India-based Vedanta Resources PLC at 'BB'. The outlook is negative. We removed the rating from CreditWatch, where it was placed with negative implications on Aug. 17, 2010. We also assigned a 'BB' rating to Vedanta's two bank loans totaling US$3.15bn--a senior secured term loan facility (Tranche B) US$1.65bn three-year bullet term loan, and a senior secured bridge to bond facility of US$1.50bn. The company will use the proceeds to finance the proposed acquisition of Cairn India.
"We affirmed our rating on Vedanta to reflect our expectation that the company's overall business risk profile will remain unchanged after the Cairn acquisition. In our opinion, operating risk will increase for Vedanta because Cairn represents a new line of business, offsetting the benefits from diversified revenues. The rating affirmation assumes that the Cairn acquisition will proceed without material changes in the proposed terms," said Standard & Poor's credit analyst Suzanne Smith.
In our view, Vedanta's organic growth plans could slow down because of increasing operating risks at some of its business segments--particularly copper, aluminum, and iron ore in India--and tightening of environmental regulations. A ban on iron-ore exports from Karnataka, Vedanta's limited potential for backward integration into bauxite mining in Niyamgiri, and its slower-than-expected expansion of aluminum and copper operations in India is likely to slow the growth in cash flow from those segments, at least in the near future.
Production and cost structure have improved at Vedanta's Zambian copper operations. Nevertheless, sustained improvement at the Zambian unit would provide a clearer outlook on the company's production volumes and margins,
which it forecasts to increase.
Vedanta's presence in India offers advantages in terms of proximity to the fast-growing economies of India and China, easy access to a rich mineral base, and low production costs. The company's profitability and cost profile are comparable to global peers'. The operating margins of Vedanta's aluminum and copper businesses are well below 20% (due to limited backward integration). Those of its zinc, iron-ore, and power businesses are about 50% because of higher integration and lower production costs. We expect the company's strong project pipeline to boost capacity over the next two to three years. Vedanta will gradually commission expansion projects in zinc, iron ore, and power.
"With the Cairn acquisition, the U.K. holding company's debt will increase by about US$6.80bn--of which US$4.50bn (including a US$1.0bn bridge to equity bank loan) will be due in two to three years. In our view, the high debt is a credit risk because the company has historically kept surplus cash at certain majority-owned operating subsidiaries in India, rather than sending it upstream to the holding company. With additional holding company debt, Vedanta will need to send more cash for debt servicing upstream or depend upon continual access to banks and capital markets for refinancing," said Ms. Smith.
We assigned our 'BB' rating to Vedanta's bank loans. Although the company's ratio of priority liabilities to total assets is more than 20%, we do not notch down for subordination of debt in India. Furthermore, the company benefits from good diversity, which reduces the structural subordination with the holding company organizational structure.
The negative outlook reflects our view of Vedanta's sizable debt burden, its "lumpy" debt maturity profile over the next two years, and its need to send cash upstream or refinance. The negative outlook also reflects increased operating risk that could slow cash flow growth.
India Infoline News Service / 10:25 , Feb 15, 2011
The outlook is negative. We removed the rating from CreditWatch, where it was placed with negative implications on Aug. 17, 2010.
Standard & Poor's Ratings Services said today that it had affirmed its long-term foreign currency corporate credit rating on India-based Vedanta Resources PLC at 'BB'. The outlook is negative. We removed the rating from CreditWatch, where it was placed with negative implications on Aug. 17, 2010. We also assigned a 'BB' rating to Vedanta's two bank loans totaling US$3.15bn--a senior secured term loan facility (Tranche B) US$1.65bn three-year bullet term loan, and a senior secured bridge to bond facility of US$1.50bn. The company will use the proceeds to finance the proposed acquisition of Cairn India.
"We affirmed our rating on Vedanta to reflect our expectation that the company's overall business risk profile will remain unchanged after the Cairn acquisition. In our opinion, operating risk will increase for Vedanta because Cairn represents a new line of business, offsetting the benefits from diversified revenues. The rating affirmation assumes that the Cairn acquisition will proceed without material changes in the proposed terms," said Standard & Poor's credit analyst Suzanne Smith.
In our view, Vedanta's organic growth plans could slow down because of increasing operating risks at some of its business segments--particularly copper, aluminum, and iron ore in India--and tightening of environmental regulations. A ban on iron-ore exports from Karnataka, Vedanta's limited potential for backward integration into bauxite mining in Niyamgiri, and its slower-than-expected expansion of aluminum and copper operations in India is likely to slow the growth in cash flow from those segments, at least in the near future.
Production and cost structure have improved at Vedanta's Zambian copper operations. Nevertheless, sustained improvement at the Zambian unit would provide a clearer outlook on the company's production volumes and margins,
which it forecasts to increase.
Vedanta's presence in India offers advantages in terms of proximity to the fast-growing economies of India and China, easy access to a rich mineral base, and low production costs. The company's profitability and cost profile are comparable to global peers'. The operating margins of Vedanta's aluminum and copper businesses are well below 20% (due to limited backward integration). Those of its zinc, iron-ore, and power businesses are about 50% because of higher integration and lower production costs. We expect the company's strong project pipeline to boost capacity over the next two to three years. Vedanta will gradually commission expansion projects in zinc, iron ore, and power.
"With the Cairn acquisition, the U.K. holding company's debt will increase by about US$6.80bn--of which US$4.50bn (including a US$1.0bn bridge to equity bank loan) will be due in two to three years. In our view, the high debt is a credit risk because the company has historically kept surplus cash at certain majority-owned operating subsidiaries in India, rather than sending it upstream to the holding company. With additional holding company debt, Vedanta will need to send more cash for debt servicing upstream or depend upon continual access to banks and capital markets for refinancing," said Ms. Smith.
We assigned our 'BB' rating to Vedanta's bank loans. Although the company's ratio of priority liabilities to total assets is more than 20%, we do not notch down for subordination of debt in India. Furthermore, the company benefits from good diversity, which reduces the structural subordination with the holding company organizational structure.
The negative outlook reflects our view of Vedanta's sizable debt burden, its "lumpy" debt maturity profile over the next two years, and its need to send cash upstream or refinance. The negative outlook also reflects increased operating risk that could slow cash flow growth.