S&P puts Kipco on watch

S&P said it placed its ratings for Kipco (Kuwait Projects Co. (Holding) KSC) on CreditWatch with negative implications. The company is planning to merge with Qurain Petrochemical Industries Co., which could help Kipco’s credit profile.

However, “Leverage and liquidity have further deteriorated, given capital injections to subsidiaries. Despite the expected above-mentioned medium-term benefits of the merger, Kipco's financial profile remains under increasing pressure, and this is the main reason for the CreditWatch placement,” the agency said in a press release.

Management is confident it will close the merger before Dec. 31. “Nevertheless, if the transaction is delayed, or faces unexpected challenges, Kipco's financial performance could further deteriorate rapidly. We could lower the long-term rating on Kipco by more than one notch if Kipco is unable to complete the QPIC transaction by year-end 2022 and move its adjusted loan-to-value ratio to well below 60%,” S&P said.

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