Moody’s lowers Yingde Gases

Moody's Investors Service said it downgraded Yingde Gases Group Co. Ltd.'s corporate family rating to Caa1 from B3.

The agency also said it downgraded to Caa2 from Caa1 the senior unsecured rating on the bonds issued by Yingde Gases Investment Ltd. and guaranteed by Yingde Gases.

The outlook is negative.

This action concludes the ratings review that began Dec. 22, Moody’s said.

The downgrades reflect the high probability of a default on its offshore bond obligations, as the escalation of the shareholders' dispute could cut off the company's access to offshore funding and thereby its ability to repay its bank loan in early January, the agency said.

On Dec. 22, the company announced that two of its shareholders filed an application to the Cayman Islands court to restrain the company from issuing new shares, Moody’s explained.

In its announcement, Yingde Gases also states that while it is proactively making financial arrangements to minimize the adverse impact brought by the delay of its new share issuance, the company does not rule out a material default on its HK$820 million loan agreement that has a termination date of Jan. 3, 2017, the agency added.

These developments could lead to the insolvency of the company if the shareholder dispute is not resolved within days, Moody’s said.

The agency said it will continue to monitor the company's completion of its new share issuance, alternative refinancing plans, the potential Cayman Islands court injunction and the progress in resolving the dispute with its shareholders.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.