S&P lowers Titan Petrochemicals

Standard & Poor's said it lowered its long-term credit rating on Malaysia-based Titan Petrochemicals & Polymers Bhd. to B- from BB-. The outlook is negative.

S&P said the rating action follows the company's decision not to proceed with its previously planned $300 million notes issue, which would have partly mitigated the weaknesses in the company's liquidity and liability profile.

"Standard & Poor's considers that Titan's very weak liquidity has the potential to precipitate a cash flow crisis," said S&P credit analyst Sharad Jain, director in the Asia-Pacific Corporate and Infrastructure Ratings Group.

Titan has about Malaysian ringgit 143 million in undrawn committed bank facilities and RM85 million in cash, compared with RM311 million bank facilities falling due for renewal in the next six months. In addition, RM280 million of its term debt is due for repayment in the next nine months.

"Titan's current plans to manage its cash flows depend largely on its ability to get the banks to roll over these facilities, or extend new ones. In the past, the Malaysian banks have supported the company in its financial difficulties. However, given the company's strained liquidity, any delay by the banks in renewing the credit facilities could trigger cash flow difficulties," Jain said.

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