Fitch: MAK's extension does not affect expected ratings

ZGM DAILY

2018-03-06 09:00 GMT+8
Fitch reported that it will continue to monitor closely the company's refinancing and restructuring efforts.

Fitch Rating announced that Mongolyn Alt (MAK) LLC has received an extension on the expiry of its consent and waivers for its loans from the European Bank for Reconstruction and Development (EBRD) and Deutsche Investitions (DEG) to March 31, 2018 from February 28, 2018, as a proposed bond issuance has been delayed. The extension will not affect the expected Long-Term Issuer Default Rating (IDR) of “CCC+” on MAK and the expected rating of “CCC+”on its proposed US dollar notes that Fitch Ratings assigned on 31 January 2018. Fitch reported that it will continue to monitor closely the company's refinancing and restructuring efforts.

Mongolyn Alt LLC extends the proposed bond deal and debt restructuring

MAK's expected ratings reflects the Mongolia-based coal miner's adequate liquidity and debt maturity profiles, assuming it completes the proposed bond deal and debt restructuring. The company plans to repay some of its existing loan facilities that are in default with proceeds from the proposed bond. The remaining loans will be restructured based on terms outlined in the signed consents and waivers from each respective lender.

MAK intends to repay the loans from EBRD and DEG with the proceeds from the proposed bond issuance. The consent and waivers from the company's other lenders expire on May 31, June 30, (Development Bank of Mongolia) and August 31 (BHF-BANK Aktiengesellschaft). In addition, the EKF loan consents and waivers require MAK to complete its proposed bond issuance by March 31, 2018.

MAK's expected IDR incorporates Fitch's expectation that the company will be able to generate positive free cash flows over the medium term, barring a significant deterioration in coal prices. This is based on the assumption that MAK will be able to reduce production costs and capex during moderate coal price weakness.

MAK to complete its proposed bond issuance by March 31, 2018

These expectations are counterbalanced by MAK's history of aggressive debt-funded investments, and limited access to external funding, which may heighten the company's liquidity risk if there is a sharp, sustained coal price or demand downturn and unfavourable capital market conditions.

The final ratings are contingent upon successful issuance of the proposed bond and completion of the restructuring in line with the terms already received, and upon receipt of final documents conforming to information already received. 

Oyunbayar.N

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