Analyst Research

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Provider: Reuters Investment Profile
$20.00
Provider: GlobalData
$125.00
Provider: GlobalData
$125.00
Provider: GlobalData
$125.00

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S&P Places Koks OAO's Rating On CreditWatch Negative-Interfax


Tuesday, 19 Feb 2013 07:42am EST 

Interfax reported that Standard & Poor's (S&P) has placed Koks OAO's B long-term credit rating on CreditWatch with negative implications. The CreditWatch placement follows Koks OAO's publication of a request to reset the incurrence covenant, and reflects S&P's view of the risks that may arise for the Company if the bondholders do not consent, the press release said. S&P anticipates that, due to unfavorable industry conditions in 2012, Koks OAO's leverage as measured by net debt to EBITDA will have exceeded the 3.5x threshold under the Eurobond documentation as of December 31, 2012. Hence, the ratings agency anticipates that without a covenant reset, the Company will not be able to attract additional debt to fund its working capital and capital expenditure program as early as April 2013, after it publishes its annual report. S&P expects that Koks will not be able to draw funds under its sizable committed lines, which are its main source of liquidity, while cash on the balance sheet remains limited. This would likely lead to a revision of S&P's liquidity assessment to "weak". The CreditWatch placement also reflects the weak coal price environment, which will likely lead to leverage in 2013 beyond S&P's previous expectation of debt to EBITDA of 4.0x. S&P is therefore revising its assessment of Koks OAO's financial risk profile. The agency intends to resolve the CreditWatch placement when Koks discloses the results of the bondholders' vote on its request to reset the covenant. 

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