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Moody's downgrades Quintis
Moody's Investors Service said it downgraded Quintis Ltd.'s corporate family rating and senior secured debt rating to B3 from B2 and placed the ratings on review for downgrade.
The action and review follows a number of negative announcements by Quintis that could reduce the company's future earnings and cash flow generation, Moody's said, and potentially negatively affect the willingness of wholesale investors to invest in new plantations.
The most recent announcement relates to Quintis' subsidiary, Santalis Pharmaceuticals, which had entered into a 20-year contract to supply East Indian sandalwood oil to pharmaceutical company Galderma, a subsidiary of Nestle, the agency explained.
On May 9, the company advised that Santalis' licensing and supply arrangements had terminated with effect Jan. 1, 2017, Moody's said.
Moody's noted that Santalis made no sales to Galderma in 2017 and that the Quintis' guidance for 2017 does not factor in any sales to Galderma.
But the loss of the contract beyond 2017 creates some uncertainty around the sustainability of the company's future earnings and cash flow generation, as well as the effectiveness of management reporting, the agency said.
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