Ranhill Credit Rating Put On Negative Watch!

The following postings were blogged recently in July 2008.

1. Ranhill: Our Financial News Being Used To Drive The Stock Higher!
2. Ranhill Answers: Our Financial News Being Used To Drive The Stock Higher!
3. Ranhill Privatisation Rumours: What's Up With The Owner Disposing?

Here's a recap on what has happened.

Shenanigans were done via our financial press suggesting that Ranhill could be taken private by its owners and of course the stock flew up, up and away.

And what was ironic when the owner was disposing shares in the open market.

End of last month, Ranhill announced its earnings. In my opinion, it was a horror story.

Quarterly rpt on consolidated results for the financial period ended 30/6/2008

Losses totalled 719 million!!!!!!!!!

And if you refer to posting, Ranhill: Our Financial News Being Used To Drive The Stock Higher!, I mentioned the following regarding Ranhill's balance sheet health

• Let's look from an ownership perspective. The moment the boss buys everything, the boss would be in full control over the cash and debts. Yes, Ranill has a nice 960 million in its piggy bank but its total loans totals a whopping 3.529 billion! Yes, Ranill Bhd is in a whopping net debt of 2.569 billion! Which means by buying this company as it is, the boss would be effectively 2.569 billion in debts!

In the just announced quarterly earnings, Ranhill's balance sheet has deteriorated. Bank balances is at 888.576 million but total borrowings has soared to 4.023 billion! Which means the company is now in a net debt of a whopping 3.134 billion!!!!!!!!!

Alarm bells?

And would the owners really want to privatise this whopping junk of debt?

And this morning, I saw the following article. S&P puts Ranhill on negative watch

• The rating agency has placed the engineering group's corporate credit rating on CreditWatch with negative implications after Ranhill posted a RM690 million net loss
  
  RANHILL Bhd's corporate credit rating was put on negative watch by rating agency Standard & Poor's (S&P) after the engineering group reported a net loss last year.
  
  For the financial year ended June 30 2008, Ranhill posted a RM690 million net loss and interest coverage of 1.1 times, which were significantly lower than expected, S&P said in a press release yesterday.
  
  "While Ranhill has informed us its RM556 million provisioning is non-cash, preliminary discussions with the company indicate that there are also material delays in the Libyan housing project and ongoing independent power producer projects," said S&P credit analyst Joey Chew.
  
  "Furthermore, there are deviations from the initial business plans."
  
  The rating agency has placed its "B" corporate credit rating of Ranhill Bhd on CreditWatch with negative implications.
  
  At the same time, the "B-" rating on Ranhill's US$220 million (RM684 million) senior unsecured notes was also placed on CreditWatch with negative implications.
  
  "We will seek greater clarity on the group's revised business plan and its investment outlay," Chew said.
  
  Although the immediate concerns are alleviated by the debt service reserve account under the notes, delays in the projects that are in progress and weaker credit metrics may result in a one-notch downgrade, S&P said.
  
  Fitch Ratings, another agency, said yesterday that it saw no immediate change to Ranhill's issuer default rating of "B" with a stable outlook after the announcement of the results.
  
  "Ranhill's reported losses are attributable to non-cash items which have no immediate impact on its debt-servicing ability. The majority of such non-cash charges relate to the Melut-basin development project in Sudan," Fitch said.
  
  Still, Ranhill's liquidity continues to be weak with the profitability of its engineering and construction segment hit by cost overruns and delays in several other projects, Fitch added.
  
  Shares of Ranhill fell 13.1 per cent to 89.5 sen yesterday.

Ranhill shares closed at 89.5 sen yesterday?

Ouch!!!!

And the shares were trading above 1.40 back in July - many thanks to that privatisation speculation!!!