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| Sunday, 28 September 2003 |
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| News Business Features Editorial
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Fitch affirms JKH rating Fitch Ratings Lanka Ltd (FRL) has affirmed the SL AA+ national rating of John Keells Holdings Ltd (JKH) for Implied Long-term Unsecured Senior Debt. SL AA+ rating denotes a very low expectation of credit risk. It indicates strong capacity for timely payment of financial commitments, which is not significantly vulnerable to foreseeable events. Further to the recent acquisition of Asian Hotels Corporation Ltd, JKH has announced that it plans to raise six billion rupees from a private placement and rights issue of 1 for 7 on the increased share capital including the private placement. The increased equity would reduce JKH's Debt/Equity ratio to 25-35 per cent. As at June 30, 2003, this ratio was 55 per cent. Furthermore, other creditor protection measures of EBITDA/Interest and Total Debt/EBITDA would also improve to 10(x) and 1.2(x) respectively, comfortable for this rating category. While capital investments for improvements to the acquired properties are also envisaged in the near term, they are unlikely to have a significant credit impact. The acquisition adds two hotel properties to JKH's leisure segment, doubling the total assets of this segment. As a result, the leisure segment would now account for 40 per cent of the group's total assets. The JKH Board has recommended to the shareholders a private placement of up to 24 million ordinary shares, each ranking pari passu with existing ordinary shares, at the closing market price of an ordinary share of JKH in the Colombo Stock Exchange (CSE) as at the closure date of the private placement as determined by the Board and an increase of its authorised share capital from Rs 3 billion to Rs 10 billion to accommodate share issues in the future. The rights issue, existing after the private placement, is at Rs 75 per share. |
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