{"id":11900,"date":"2012-06-28T00:00:10","date_gmt":"2012-06-27T22:00:10","guid":{"rendered":"http:\/\/www.myza.co.za\/06\/text-sp-revises-peermont-outlook-to-negativeaffirms-b-rating\/"},"modified":"2012-06-28T00:00:10","modified_gmt":"2012-06-27T22:00:10","slug":"text-sp-revises-peermont-outlook-to-negativeaffirms-b-rating","status":"publish","type":"post","link":"https:\/\/www.myza.co.za\/press\/text-sp-revises-peermont-outlook-to-negativeaffirms-b-rating\/","title":{"rendered":"TEXT-S&P revises Peermont outlook to negative;affirms ‘B-‘ rating"},"content":{"rendered":"

\t\t<\/span><\/p>\n

<\/span><\/p>\n

<\/span><\/p>\n

Rationale<\/p>\n

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The outlook revision reflects our view that Peermont faces substantial
\nrefinancing risk due to its complex capital structure and significant debt
\nmaturity in 2014. The refinancing risk relates to the group’s euro-denominated
\nbond that matures in 2014, because management informs us that it is in the
\nlatter stages of extending the revolving credit facility (RCF) by less than
\none year to December 2013 on the same terms. Peermont’s Standard
\nPoor’s-adjusted EBITDA interest coverage remains weak, in our view, and we do
\nnot believe that it will improve without extensive refinancing.<\/p>\n

<\/span><\/p>\n

In our opinion, Peermont’s current capital structure is unsustainable and
\nthere is an increasing risk of the group undertaking credit-dilutive debt
\nrestructuring measures. We are monitoring this risk closely because we view
\nsuch debt restructuring as tantamount to a default under our criteria. We
\nthink that Peermont faces various challenges in refinancing its capital
\nstructure and we assess its liquidity as “less than adequate” as defined by
\nour criteria.<\/p>\n

<\/span><\/p>\n

Peermont is currently reviewing its capital structure alongside discussions to
\nrefinance its 2014 debt maturity. We think that a refinancing may entail the
\nconversion of parts of its subordinated debt into equity. The outcome of the
\nreview is likely to be significant in terms of the evolution of Peermont’s
\nliquidity and capital structure. However, the timing of the eventual
\nrefinancing or restructuring of the bond is currently uncertain because this
\nremains subject to a consensus among the relevant stakeholders, and we
\nunderstand that it may require a fresh equity injection.<\/p>\n

<\/span><\/p>\n

We assess Peermont’s financial risk profile as “highly leveraged.” This
\nreflects our view of the group’s high leverage, complex capital structure, and
\nweak credit protection metrics. We consider Peermont’s adjusted EBITDA
\ninterest coverage to be weak, at less than 1x. In our view, this is unlikely
\nto improve on a sustainable basis in the short to medium term due ongoing
\nmargin compression driven by rising labor costs and sluggish growth in leisure
\nspending.<\/p>\n

<\/span><\/p>\n

We continue to assess Peermont’s business risk profile as “weak,” reflecting
\nits dependence on one site (the Emperors Palace casino complex in South
\nAfrica) and cyclical pressure on margins on account of material inflation of
\nlabor costs and weak discretionary leisure spending. These factors are
\nmitigated to some extent by Peermont’s established position in South Africa’s
\ngaming market; the strength of its margins compared to those of its
\ncompetitors; the good location of its main properties; and high barriers to
\nentry due to regulation and fully allocated licenses.<\/p>\n

<\/span><\/p>\n

<\/span><\/p>\n

Liquidity
\n\u00a0 Continued…<\/strong><\/span><\/p>\n

<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Rationale The outlook revision reflects our view that Peermont faces substantial refinancing risk due to its complex capital structure and significant debt maturity in 2014. The refinancing risk relates to the group’s euro-denominated bond that matures in 2014, because management informs us that it is in the latter stages of extending the revolving credit facility […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","ngg_post_thumbnail":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[830,2370,183],"class_list":{"0":"post-11900","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-south-africa","7":"tag-news","8":"tag-reuters","9":"tag-south-africa-2","10":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/11900","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/comments?post=11900"}],"version-history":[{"count":0,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/11900\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/media?parent=11900"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/categories?post=11900"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/tags?post=11900"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}