Ciech SA -- Moody's assigns (P)B2 rating to Ciech's new senior secured notes; stable outlook
Moody's issues provisional ratings in advance of the final sale of securities and these reflect Moody's credit opinion regarding the transaction only. Upon a conclusive review of the final documentation Moody's will endeavour to assign definitive ratings. A definitive rating may differ from a provisional rating.
Ciech Group Financing AB is issuing the notes, together with PLN382 million of Polish Zloty notes and a PLN100 million revolving credit facility, to refinance Ciech's existing indebtedness. The assigned (P)B2 rating reflects the pari passu ranking of the notes with the Polish Zloty notes and behind the super-priority revolving credit facility.
The (P)B2 CFR factors in Ciech's solid position as the largest regional producer of soda ash in Central Europe with production facilities in Poland, Germany and Romania. Moody's positively notes Ciech's low-cost production capabilities, as well as the improved energy efficiency at the company's Polish facilities, following recent investments. The company's competitive position is supported by established supply relationships with leading glass producers in the region and high transportation costs, relative to the cost of production, which mitigate competitive pressures from foreign suppliers and support solid operating margins. However, the rating also recognizes risks associated with the on-going divestment programme of sizable non-core businesses, that have significantly weaker operating and credit characteristics, and Ciech's exposure to cyclical end markets such as construction. Finally, the rating reflects the elevated leverage and moderate historical operating cash flows although balanced by the expectation that Ciech will continue to focus on debt reduction and improving cash flow generation.
Ciech operates four soda ash and baking soda production facilities located in Poland (2), Germany (1) and Romania (1) making it the second-largest producer of soda ash in Europe by capacity, after Solvay SA (Baa1 negative) and the largest producer in Central Europe. Transportation costs can be substantial and customers and suppliers are typically located in close proximity to ensure cost-efficient production, thereby also providing some barriers to entry.
Soda ash is primarily used in the production of glass for construction, automotive and packaging end markets. Other applications include detergents and soaps. Products in Ciech's non-core business find their way into a variety of end markets including paint, coatings or furniture. As such Ciech is exposed to cyclicality, mitigated to a degree by a diversified customer base and strong regional competitive positions in its core soda business.
The soda ash market has seen some consolidation and recovered following a downturn in 2009-10. It is expected to remain on a modest growth trajectory (more so in Central Europe). The market balance, however, remains sensitive to additional supply from lower-cost Turkish producers that run trona-based production processes. The rating assumes limited, if any, near-term pressure on Ciech.
Energy represents the largest cost factor for soda ash production, along other raw materials, such as limestone, brine and anthracite. Ciech procures these mostly under long-term contracts with pre-defined pricing formulas and benefits from backwards integration into limestone, brine and energy (under a sale and leaseback arrangement) at its German facility and into energy at its Polish facilities. From 2013, Ciech will need to procure emission certificates, particularly for its coal-fired Polish facilities, which will require continued focus on energy efficiency and environmental compliance.
Ciech retains a portfolio of non-core businesses including Organic, Agrochemicals and Silicates & Glass, which together accounted for 17% of company-adjusted EBITDA for the last twelve months to September 2012. While Ciech is actively restructuring and divesting these businesses, substantial execution risk exists as the company may not find interested parties, suffer cost overruns or incur unforeseen liabilities. In this context, Moody's would particularly expect the recent divestment and closure of Zachem to be executed as planned and within budget.
Free cash flow (FCF) generation has been somewhat limited given moderate historical EBITDA/cash flow conversion, a high degree of working capital volatility and significant capital expenditure (capex). Moody's expects cash flow conversion to gradually improve as Ciech divests low-margin businesses and reduces restructuring costs while capex spending should reduce in 2013 following the completion of investment projects. However, Ciech is expected to visibly invest from 2014 on to improve energy efficiency at its Polish facilities.
The company remains leveraged following the transaction with estimated adjusted Debt/EBITDA just below 4.0x, pro-forma, for the last twelve months to September 2012. However, Moody's also recognises the debt reduction achieved by Ciech over the past three years and expects the company to maintain its focus on reducing leverage ahead of shareholder distributions.
Ciech falls under Moody's Government-Related Issuers: Methodology Update, published July 2010, given the Polish government's (37.9%) partial ownership of the company. As a result, Moody's overlays the company's underlying credit strength with its joint default analysis for government-related issuers (GRIs). In this context, the assessment of Support is Low reflecting the relative independence of Ciech in managing its operations. It also recognizes the government's endorsement of Ciech's strategy, which is intended to over time maximise the value of the company and reflects the government's long-term aim to realise the monetary value of its stake. The Dependency assessment of Low reflects Ciech's relatively diversified revenue base with only 37% of 2011 revenues generated in Poland and minimal financial linkages with the government. As a result, the rating does not factor in explicit uplift to the b2 baseline credit assessment and would also not be affected if the government were to reduce its ownership.
Moody's views Ciech's liquidity as adequate. As of September 2012, the company had cash balances of PLN161 million and, following the refinancing, will have an undrawn revolving credit facility of PLN100 million. In addition, Ciech will receive EUR43 million from the sale of certain assets of its subsidiary Zachem to BASF in the first half of 2013 following, amongst others, regulatory approval. This should be sufficient to compensate for swings in working capital and temporary capex peaks.
The stable outlook reflects Moody's expectation that Ciech will successfully execute the restructuring and divestment of its non-core businesses over time and regain its focus on the core soda ash business while maintaining adequate liquidity.
WHAT COULD CHANGE THE RATING UP/DOWN
Positive rating pressure could develop if Ciech deleverages further, supported by a successful execution of the restructuring and divestment process, so that adjusted Debt/EBITDA decreases below 3x and FCF/Debt increases above 5%.
Conversely, negative rating pressure could develop if any deviations from Moody's outlined expectations occur, such as a delay in the divestment process or a change in the competitive dynamics of the soda business, leading to weaker operating performance, with adjusted Debt/EBITDA reaching 4.5x and/or free cash flow turning negative; or any liquidity pressures becoming apparent.
The principal methodology used in rating Ciech SA and Ciech Group Financing AB was the Global Chemical Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009 and the Government-Related Issuers: Methodology Update published in July 2010. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.
Ciech SA, headquartered in Poland, is Europe's second-largest soda ash producer, with a focus on Poland, Germany and Central Europe. It also operates a number of non-core chemical businesses that represent 17% of group EBITDA for the last twelve months to September 2012. For the same period, the company generated revenue and normalised EBITDA of PLN4.4 billion and PLN409 million, respectively. Ciech has been listed on the Warsaw Stock Exchange since 2005 and its largest shareholder as of 29 August 2012 was the Polish State Treasury (37.9%).
For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
The ratings have been disclosed to the rated entities or their designated agent(s) and issued with no amendment resulting from that disclosure.
Information sources used to prepare each of the ratings are the following: parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated entities, obligations or credits satisfactory for the purposes of issuing these ratings.
Moody's adopts all necessary measures so that the information it uses in assigning the ratings is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entities or their related third parties within the two years preceding the credit rating action. Please see the special report "Ancillary or other permissible services provided to entities rated by MIS's EU credit rating agencies" on the ratings disclosure page on our website www.moodys.com for further information.
Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.
The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Tobias Wagner Analyst Corporate Finance Group Moody'sInvestors Service Ltd. One Canada SquareCanary WharfLondon E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Chetan Modi MD - Corporate Finance Corporate Finance Group JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Releasing Office: Moody's Investors Service Ltd. One Canada SquareCanary WharfLondon E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATIONS") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED,DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error negligent or otherwise or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations -- Corporate Governance -- Director and Shareholder Affiliation Policy."
Any publication into Australia of this document is by MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657, which holds Australian Financial Services License no. 336969. This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001.
Notwithstanding the foregoing, credit ratings assigned on and after October 1, 2010 by Moody's Japan K.K. ("MJKK") are MJKK's current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities. In such a case, "MIS" in the foregoing statements shall be deemed to be replaced with "MJKK". MJKK is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO.
This credit rating is an opinion as to the creditworthiness or a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be dangerous for retail investors to make any investment decision based on this credit rating. If in doubt you should contact your financial or other professional adviser.
Nachrichten zu Ciech S.A.
- vom Unternehmen
- Peer Group
Um Ihnen die Übersicht über die große Anzahl an Nachrichten, die jeden Tag für ein Unternehmen erscheinen, etwas zu erleichtern, haben wir den Nachrichtenfeed in folgende Kategorien aufgeteilt:
Relevant: Nachrichten von ausgesuchten Quellen, die sich im Speziellen mit diesem Unternehmen befassen
Alle: Alle Nachrichten, die dieses Unternehmen betreffen. Z.B. auch Marktberichte die außerdem auch andere Unternehmen betreffen
vom Unternehmen: Nachrichten und Adhoc-Meldungen, die vom Unternehmen selbst veröffentlicht werden
Peer Group: Nachrichten von Unternehmen, die zur Peer Group gehören
Analysen zu Ciech S.A.
Mehr zur Ciech-Aktie
Heute im Fokus
Familienunternehmen: Rendite und Sicherheit!