Fitch downgrades Ballarpur

Fitch Ratings said it downgraded the long-term issuer default ratings on Ballarpur Industries Ltd. and its subsidiary, Bilt Paper BV, to B- from B+ and placed the ratings on Rating Watch negative.

The company continues to face the twin challenges of high leverage and weak liquidity, Fitch said.

The agency said it estimates the company’s leverage, measured by net debt-to-EBITDA with 50% equity credit for the perpetual debt, jumped to 10.3x in the financial year that ended March 31, 2016 from 7.8x in 2015.

Fitch said it previously predicted the company would be able to sell off its stake in Sabah Forest Industries Bhd. by year-end 2016 and use the proceeds to de-leverage.

However, the proposed deal to dispose of the stake has been terminated, the agency explained.

In addition, prices and demand for paper have remained weak over the last few years, Fitch said.

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