[ET Net News Agency, 16 August 2019] Moody's Investors Service has placed on review for
downgrade the B2 corporate family rating and B3 senior unsecured debt rating of GCL New
Energy Holdings Limited (00451).
The outlook was changed to ratings under review from negative.
"The rating review reflects the significant refinancing risk that GCL New Energy faces,
with material debt falling due in the remainder of 2019, and with limited visibility
around committed refinancing," said Ivy Poon, a Moody's Vice President and Senior Analyst.
Prior to today's rating action, the outlook on the ratings was negative, reflecting
these concerns.
Moody's estimates that GCL New Energy has at least RMB6.2 billion of debt maturing
through December 2019, with the majority due in the next 1-2 months.
However, the company has not yet secured meaningful credit facilities to address these
large refinancing needs. While Moody's understands that GCL New Energy has been in
discussion with several financial institutions, uncertainty remains over the timing and
size of any new funding to be obtained.
Moody's notes the co-operation intent agreement between GCL-Poly Energy Holdings Limited
(03800)(GCL New Energy's parent) and China Huaneng Group Co., Ltd, which was announced on
June 2019. The co-operation intent agreement includes the potential for China Huaneng
acquiring a majority stake in GCL New Energy.
"However, there is no assurance at this stage that a transaction will materialize in the
short term," Poon said, adding "Should a transaction materialize, there is uncertainty
about its form, and ultimate impact on GCL New Energy."
Until such time, GCL New Energy's credit profile remains constrained by its high
near-term refinancing challenges. (KL)