February 16 (SeeNews) - Moody's believes that Croatian retailer and food manufacturer Agrokor will have sufficient liquidity to repay debt maturities in 2017, despite having terminated a syndicated loan last month, local media reported.
"The restricted group has no meaningful bond or bank debt repayments until September 2018 thanks to the refinancing completed at the end of 2016", news agency Hina reported late on Wednesday, quoting from a Moody's report.
The ratings agency noted, however, that the termination of the syndication is credit negative because Agrokor remains dependent on a limited number of Russian banks.
Moody's explained that its decision to cut the corporate family rating (CFR) of the retailer to B3, in early January, was complicated by its financial constraints.
"Debt is located at three different levels: in the restricted group, at the level of Mercator and at the level of its holding, Adria. The restricted group also includes several fully consolidated but partly owned subsidiaries, particularly in the food manufacturing division, the most profitable segment," it said.
The ratings agency forecast that in 2017, Agrokor will see interest expenses excluding the PIKs of 310 million euro ($330 million), which will absorb more than half of its EBITDA estimated at 580 million euro.
Moody's warned that a clear plan to address the repayment of the PIKs - which Agrokor's holding Adria took out in 2014 to finance the acquisition of Mercator - is critical to maintain the rating at the current level.
"During the latest refinancing, a new clause was added in the documentation of some bank facilities, which specifies that the corresponding loans could become immediately due and payable if the PIKs were not refinanced by 8 March 2018", Moody's said. "Even if an acceleration does not happen on that date, failing to repay the PIKs on 8 June 2018 may trigger a change of control. This would allow banks and bondholders to ask for an immediate repayment", it judged.
In January, Moody's downgraded Agrokor's corporate family rating (CFR) to B3 from B2 and its probability of default rating (PDR) to B3-PD from B1-PD.
"The downgrade reflects our view that Agrokor is not likely to restore credit ratios in line with our previous requirements for a B2 rating in light of the deterioration in operating performance that occurred during the first nine months of 2016", the ratings agency said at the time.
($=0.940550 euro)