TEXT-S&P: Fisher & Paykel Finance Ltd. on creditwatch positive
(The following statement was released by the rating agency)
Sept 12 -
-- On Sept. 11, 2012 Fisher & Paykel Appliances Holding Ltd. (F&PAHL) announced that Haier New Zealand Investment Holding Co. Ltd. had offered to purchase all of the shares in F&PAHL that Haier does not already hold.
-- The offer price and the F&PAHL board's supportiveness (subject to further due diligence) of the takeover offer raise the likelihood of its acceptance, in our view.
-- We have placed the 'BB' long-term issuer credit rating on F&PAHL's subsidiary, Fisher & Paykel Finance Ltd. (F&PFL), on CreditWatch with positive implications, following our review of the impact of this offer on our ratings on F&PFL.
On Sept. 12, 2012, Standard & Poor's Rating Services placed its 'BB' long-term issuer credit rating on New Zealand finance company Fisher & Paykel Finance Ltd. (F&PFL) on CreditWatch with positive implications.
Our long-term issuer credit rating on F&PFL has been placed on CreditWatch with positive implications, following an offer from Haier New Zealand Investment Holding Co. Ltd. (Haier, not rated), an entity of Haier Electronics Group Co. Ltd (Haier Electronics, not rated) to take over F&PFL's parent company, Fisher & Paykel Appliance Holdings Ltd. (F&PAHL).
On Sept. 11, 2012, F&PFL's ultimate parent company, F&PAH, announced on the New Zealand Stock Exchange that Haier had offered to purchase all of the shares in F&PAH that Haier does not already hold. Haier has already entered into a lock-up agreement with a large shareholder, taking its potential interest to 37.46%--closer to the 50% required for the offer to proceed. The offer is also subject to regulatory consent. The NZ$1.20 cash offer per share is at a significant premium to the pre-existing share price. The F&PAHL's independent board is supportive of Haier's offer on the following basis:
-- The offer price must be within or above the valuation range, as determined by the independent advisor;
-- There is no superior alternative for F&PAHL and its shareholders; and
-- The terms and conditions of the offer being acceptable.
The above-mentioned events raise the likelihood of offer acceptance.
Should the takeover offer succeed, our rating on F&PFL may be raised to 'BB+', which would be a level consistent with its stand-alone credit profile (SACP). This is because we believe that the take over is likely to result in an improvement in the credit profile of F&PAHL. The rating on F&PFL is currently constrained by our view that the company may only be rated up to a limit better than the credit profile of its parent.
In our view, F&PFL is likely to remain a non-strategic subsidiary of Haier Electronics. As a result, we do not expect the rating on F&PFL to receive any uplift from parent support. Additionally, we also consider that there is a small risk that the takeover could result in the weakening of F&PFL's SACP, for example due to Haier Electronics deciding to maintain a weaker capitalization at F&PFL. Nevertheless, in our view, the risk of such a development is remote, due to its potential impact on F&PFL's business or any future divestiture plans.
The CreditWatch positive reflects our view that our rating on F&PFL may be raised to 'BB+', if the offer for the take over is successful.
Alternatively, although less likely, if the takeover becomes likely to not proceed then we are likely to affirm all ratings and remove F&PFL from Credit Watch positive. We expect to resolve the Credit Watch after we review F&PAHL's credit profile following the completion of the takeover process.
Related Criteria And Research
Rating Finance Companies, March 18, 2004
Group Rating Methodology And Assumptions, Nov. 9, 2011
Ratings Affirmed; CreditWatch/Outlook Action
Fisher & Paykel Finance Ltd.
Counterparty credit rating BB/Watch Pos/B BB/Stable/B
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