RPT-Fitch Revises Outlook of Ek-Chai Distribution System's Debentures to Negative

Fri Dec 6, 2013 9:20am EST

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Dec 6 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings (Thailand) Limited has revised the rating Outlook of Ek-Chai Distribution System Company Limited's (ECDS) guaranteed debentures due 2015 to Negative from Stable and affirmed the National Long-Term Rating on the debentures at 'AA+(tha)'.

The Outlook revision follows the agency's change to Tesco PLC's (Tesco) Outlook to Negative from Stable and affirmation of Tesco's Long-Term Issuer Default Rating (IDR) at 'BBB+'. For further details, please see 'Fitch Revises Tesco's Outlook to Negative; Affirms at BBB+', available at www.fitchratings.com.

KEY RATING DRIVERS

Guarantee from Tesco: The rating of ECDS's guaranteed debentures is based on the full and irrevocable guarantee provided by Tesco, a majority shareholder of ECDS.

Limitation on Sovereign Intervention: Tesco would not be liable to pay this guarantee in case of 1) expropriation or nationalisation of 10% or THB5bn or more, of the issuer's consolidated fixed assets, or with effect of preventing the issuer and its subsidiaries from pursuing their ordinary course of business; or 2) sovereign intervention preventing the issuer from transferring monies or converting foreign currency to pay the obligation under the debentures, or causing Tesco to lose its status as the majority or controlling shareholder.

RATING SENSITIVITIES

Positive: Future developments that may, individually or collectively, lead to positive rating action include:

- An upgrade and/or outlook revision of Tesco's rating.

Negative: Future developments that may, individually or collectively, lead to negative rating action include:

- A downgrade of Tesco's rating.

It should be noted that a one-notch change in an International rating could result in a change in a National Rating of more than one notch.

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