By NZPA
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Friday 20th September 2002 |
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Moody's said in a statement today that it had lowered its rating on Tranz Rail to B1 from B3, while the company's short term rating remained Not Prime.
"The rating downgrade reflects Moody's concerns about the liquidity position of Tranz Rail, including need under the terms of the Aratere lease to provide a letter of credit to support its obligations," senior analyst Mable Chan said.
"In addition, the company is yet to renegotiate its bank facility which falls due in November.
"The rating remains on review for further possible downgrade. The ongoing review will focus on the company's success in improving its liquidity position in the near term," Ms Chan said.
That follows a downgrade from Standard & Poor's on September 16, because of the company's weak liquidity position and the challenges it faced to improve its internal cash flow in the near-to-medium term.
Last week Tranz Rail delivered a bottom-line loss of $122.7 million for the year, in line with its forecast but well down on the previous year's net profit of $5.6 million.
Asset writedowns and changes in its accounting treatments lowered the company's operating profit from $143.3 million to $23.9 million.
The company has acknowledged a rating downgrade meant Tranz Rail might be required to provide a letter of credit from its bankers to the owners of the Aratere to cover the vessel's stipulated loss value of about $115 million.
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