S&P upgrades TCL, removes from CreditWatch

S&P upgrades TCL, removes from CreditWatch
Published: 20 August 2015

Standard & Poor's (S&P) Ratings Services raised its corporate credit rating on Trinidad Cement Ltd Group (TCL) to 'B-' from 'CCC', and removed it from CreditWatch with positive implications. The outlook is stable. At the same time, it has assigned its 'B-' issue-level rating to the company's US$200m senior secured term loan.
The rating action reflects TCL's successful debt refinancing, which took place on 6 August 2015, S&P said in a statement. The refinancing improves the company's debt maturity and liquidity profiles. As part of its debt restructuring in May 2015, TCL raised a $245m bridge loan, due in February 2016. The company refinanced the bridge loan with a $200 million senior secured term loan, composed of two
tranches: $148.3m and Trinidad and Tobago dollar (TT$) 329.6m (about $52m). It prepaid the remaining $45m of the bridge loan with cash generated from its operations during January to July 2015.
The stable outlook reflects S&P's view that TCL will post low single digit revenue growth and improved EBITDA margins over the next two years, supported by improved operating efficiencies and cost savings as part of the technical agreement signed with Cemex. The rating's agency also expects TCL to continue to post  positive FOCF generation because it plans to stabilise its operations and optimise its plants to reach target operating efficiencies.
A negative rating action is possible if TCL does not achieve its expected operating efficiencies and costs savings, resulting in lower than expected operating and financial performance, and/or if its liquidity deteriorates in  the next 12 to 18 months, S&P noted.

Although unlikely in the short term given the recent restructuring, S&P said it could take a positive rating action if the company significantly increases its scale and scope of operations. This could also take place if the company  successfully operates under its new structure in the long-term and achieves
its operating and costs savings goals.