Moody’s affirms Hutchison Whampoa

Moody's Investors Service said it affirmed the A3 issuer and senior unsecured ratings of Hutchison Whampoa Ltd. (HWL) following an announcement on its proposed reorganization.

The outlook is stable.

On Jan. 9, Hutchison Whampoa and Cheung Kong Holdings Ltd. (unrated) jointly announced a proposed reorganization of their businesses into a new non-property company, CK Hutchison Holdings Ltd. (CKH Holdings), and a new property company, Cheung Kong Property Holdings Ltd.

The companies expect the reorganization to be completed by June 30, 2015, subject to shareholder and regulatory approvals.

Hutchison Whampoa’s existing rated debt will remain with CKH Holdings, and the latter will – if the proposed transactions are completed – guarantee Hutchison Whampoa’s existing debt.

"The affirmation reflects our expectation that CKH Holdings will gain infrastructure assets with stable cash flows as well as HKD55 billion in cash," Moody's vice president and senior analyst Joe Morrison said in a news release.

Moody's noted that the company's property business accounts for only about 15% of Hutchison Whampoa’s 2013 reported EBITDA, including joint ventures and associates.

"The affirmation also reflects our expectation that CKH Holdings' debt leverage – measured as funds from operations/net debt – will not be substantially weaker than HWL's current level," Morrison added in the release.

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