PERENTI LIMITED 21 September 2020
S&P Issue Rating - Proposed Guaranteed Senior Unsecured Notes
Perenti (ASX: PRN) advises that S&P Global Ratings (S&P) has assigned a 'BB' issue rating to the proposed US$350 million Guaranteed Senior Unsecured Notes (Notes) to be issued by Perenti's wholly-owned subsidiary, Perenti Finance Pty Ltd.
S&P also affirmed Perenti's issuer credit rating of 'BB'. The outlook is stable.
S&P's report is attached.
This notice does not constitute an offer to sell, or the solicitation of any offer to buy, the Notes or any other securities. Any offer of the Notes will be made only by means of a private offering circular. The Notes are not being registered under the United States Securities Act of 1933, as amended (Securities Act), or the securities laws of Australia or any other jurisdiction. The Notes may not be offered or sold in the United States without registration under the Securities Act or an applicable exemption from such registration requirements.
Authorised by:
Mark Norwell
Managing Director and CEO
-ENDS- | |
Investor enquiries: | Media enquiries: |
Engelbert Bets | Adrian Watson |
General Manager - Corporate Finance & Investor Relations | Senior Director |
Perenti | FTI Consulting |
+61 477 322 607 | +61 419 040 807 |
Level 2, 202 Pier Street | PO Box 8286 | T +61 8 9421 6500 | |
Perth WA 6000 | Perth WA 6849 | E investorrelations@perentigroup.com | |
Australia | Australia | ||
Perenti Global Limited ABN 95 009 211 474 (ASX: PRN) (Perenti) | perentigroup.com |
Perenti is a diversified global mining services group with businesses in surface mining, underground mining and mining support services. The Group was founded in Kalgoorlie in 1987 and is today one of the world's largest companies providing surface and underground mining at scale. Headquartered in Australia, Perenti has operations and offices in 13 countries across four continents, employs around 8,000 mining professionals and is creating enduring value and certainty for clients on some of the world's largest mining projects.
Perenti Global Ltd.'s Proposed US$350 Million Senior Unsecured Notes Assigned 'BB' Rating
September 20, 2020
MELBOURNE (S&P Global Ratings) Sept. 21, 2020--S&P Global Ratings today said that it has assigned its 'BB' issue rating to the proposed five-year US$350 million unsecured 144a notes issued by Perenti Finance Pty Ltd., the financing arm of Perenti Global Ltd. (BB/Stable/--). We assigned the notes a recovery rating of '4', reflecting our expectation for average (30%-50%; rounded estimate 45%) recovery prospects in the event of a payment default.
The company will use the proceeds, including cash, to redeem Barminco Finance Pty Ltd.'s US$350 million secured notes due 2022, as well as pay transaction costs. As part of the recapitalization, the group's security structure would be consolidated and the existing secured bank facility's committed limits reduced to A$400 million from A$530 million. The revised capital structure will provide Perenti with long-dated debt and minimal refinancing risk over the medium term.
We view the proposed transaction as broadly credit neutral. The issuer credit rating reflects Perenti's increased scale and geographic diversity following its Barminco acquisition, as well our view of the company's ability to sustain credit metrics in line with the 'BB' rating level even under a moderate stress scenario.
Our 'BB' long-term issuer credit rating on Perenti Global Ltd. is unchanged. The outlook is stable.
Recovery Analysis
Our recovery analysis for Perenti Global Ltd. contemplates a hypothetical simulated default during the first half of 2025. The issue ratings on Perenti Finance Pty Ltd. and Perenti International Pty Ltd.'s A$400 million, senior secured, syndicated and bilateral bank facilities are 'BBB-' with a recovery rating of '1'. This reflects our expectation of a very high recovery (95%) should a default event occur. The A$350 million bilateral facilities mature on July 1, 2023, and the A$50 million syndicated facilities mature on May 12, 2022. The bank loans are guaranteed by Perenti Global Ltd. and rank pari passu with all other senior secured debt of the company.
The 'BB' issue rating on Perenti Finance Pty Ltd.'s proposed five-year US$350 million senior unsecured notes maturing in 2025 is in line with the issuer credit rating on the company. These notes are also guaranteed by Perenti Global Ltd. and rank pari passu with all other unsecured debt. The '4' recovery rating reflects our expectation of average recovery prospects (45%) should a default event occur.
At the time of hypothetical default, we expect adverse macroeconomic conditions to cause global end-market demand and pricing for commodities to deteriorate materially, leading to steep declines in demand for Perenti's services and multiple contract cancellations. As a result,
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Perenti Global Ltd.'s Proposed US$350 Million Senior Unsecured Notes Assigned 'BB' Rating
Perenti's revenue significantly declines, impairing its ability to meet its cash interest payments.
We value the company as a going concern because we believe that following a payment default, the company is likely to be reorganized due to the longer-term value in its established brands and business segments.
Simulated default assumptions:
- Simulated year of default: 2025
- EBITDA at emergence: A$137.7 million
- EBITDA multiple (engineering and construction services): 5.0x
- Gross enterprise value: A$688.5 million
Simplified waterfall
- Net enterprise value at emergence (after 5% administrative costs): A$654.1 million
- Estimated secured priority claims (including prepetition interest): approximately A$70 million
- Estimated net enterprise value available to secured first-lien debt: A$584.5 million
- Estimated secured first-lien claims (revolving facility [85% drawn] including prepetition interest): A$352.8 million
- Recovery expectations: 90%-100% (rounded estimate: 95%)
- Recovery rating: '1'
- Estimated net enterprise value available for unsecured debt: A$231.8 million
- Estimated senior unsecured claims (including prepetition interest): approximately A$514.5 million
- Recovery expectations: 30%-50% (rounded estimate: 45%)
- Recovery rating: '4'
*All debt amounts include six months of prepetition interest.
Related Criteria
- General Criteria: Group Rating Methodology, July 1, 2019
- Criteria | Corporates | General: Corporate Methodology: Ratios And Adjustments, April 1, 2019
- Criteria | Corporates | General: Recovery Rating Criteria For Speculative-Grade Corporate Issuers, Dec. 7, 2016
- Criteria | Corporates | General: Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Dec. 16, 2014
- Criteria | Corporates | General: Corporate Methodology, Nov. 19, 2013
- General Criteria: Country Risk Assessment Methodology And Assumptions, Nov. 19, 2013
- General Criteria: Methodology: Industry Risk, Nov. 19, 2013
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Perenti Global Ltd.'s Proposed US$350 Million Senior Unsecured Notes Assigned 'BB' Rating
- General Criteria: Methodology: Management And Governance Credit Factors For Corporate Entities, Nov. 13, 2012
- General Criteria: Principles Of Credit Ratings, Feb. 16, 2011
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.
AUSTRALIA
S&P Global Ratings Australia Pty Ltd holds Australian financial services license number 337565 under the Corporations Act 2001. S&P Global Ratings' credit ratings and related research are not intended for and must not be distributed to any person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act).
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Perenti Global Ltd.'s Proposed US$350 Million Senior Unsecured Notes Assigned 'BB' Rating
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Perenti Global Limited published this content on 21 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 September 2020 08:14:15 UTC
