KUALA LUMPUR: Sime Darby Plantation Bhd’s (SDP) liquidity is expected to remain weak despite refinancing its credit facilities as its cash sources will be insufficient to meet scheduled debt maturities, capital spending and dividends through December 2020.
However, Moody’s Investors Service, in a statement today, said the projected cash deficit was primarily driven by SDP’s short-term debt maturities, which would likely continue to be rolled over each year.
It said SDP, rated Baa1 negative, announced on Jan 30 that it had refinanced around RM3.9 bil of credit facilities in December 2019 or around 49% of its total reported debt.
“The large debt refinancing is credit positive for SDP as it will improve the company’s liquidity and extend its debt maturities. In total, SDP refinanced its US$760 mil (RM3.1 bil) foreign currency loans, which previously had a bullet maturity in June 2020, with new amortising term loans,” it said.
The international rating agency said SDP also refinanced RM800 mil working capital facilities with new term loans that have longer maturities.
“SDP announced that the new facilities offer slightly lower interest rates than its previous facilities, though specific details were not disclosed.
“Pro forma for the refinancing, we estimate SDP’s short term debt as a proportion of total debt decline to around 28% from 77% as of Sept 30, 2019,” added Moody’s. – Feb 6, 2020, Bernama