Fitch affirms Hayleys at ‘AA-(lka)’
Fitch Ratings has today Affirmed Sri Lanka-based Hayleys PLC’s (Hayleys)
National Long-term rating at ‘AA-(lka)’.
Following further evaluation the agency has simultaneously removed
the Rating Watch Negative (RWN) on Hayleys and assigned a Negative
Outlook. The assignment of the Negative Outlook mainly reflects Fitch’s
concerns with regards to the continuation of Hayleys increased leverage
levels at its holding company, post the acquisition of the Alumex group.
Based on unaudited financials for the six months to end-September
2010, this transaction would increase Hayleys’ leverage (adjusted net
debt/operating EBITDAR) as a holding company to above 5.5x.
This leverage level incorporates cash inflows of about Rs 900m due to
a part sale of Alumex to a third party.However, the strong financial
profiles, control over operational and financial policies as well as the
ability to extract higher dividends than that was paid historically from
some of Hayley’s key divisions act as mitigating factors to the holding
company’s increased leverage levels at this point in time.
Fitch also takes comfort from the management’s expected strategies of
further cash inflows in the near-term to the holding company through
asset sales and other measures.
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