Hayleys gearing to raise Rs.5bn via debenture issue

Hayleys PLC is gearing to raise Rs.5.0 billion in debt through a debenture issue, but it isn’t immediately clear what the exact purposes are, although the group has a sizable debt pile, some of which may need to be refinanced.

Hayleys, one of the most diversified conglomerates in the country did extremely well for the financial year ended March 2021 and for the nine months ended December 2021 as its subsidiaries generated elevated performances, particularly those generated export earnings, resulting in higher dividend incomes to the holding company.

As at December 31, 2021, Hayleys had a total outstanding debt of Rs.25.5 billion, but the leverage and standalone interest cover improved to 20.73 times and 2.33 times each from 5.06 times a year ago and 0.46 times in March 2020 respectively.

ICRA Lanka this week assigned AA- rating on the proposed instrument with a Stable outlook considering, “the strong operational linkages among the group entities and the high degree of control the holding company has over the dividend streams of the subsidiaries”.

The rating agency also appreciated the “group’s experienced management team, the strong professional set-up and its sound corporate governance practices as key positives, which have complemented its 
business strengths”.

However, “the ratings understands the relatively high stand-alone debt level at the Holding company, as the planned asset monetisations have got delayed due to the adverse 
macro environment.

Also, the deteriorating financial profile of the leisure sector of the group remains a challenge from a rating point of view,” they added.

Halyeys has been looking at selling some of its non-key assets to raise about Rs.10 billion in cash, but the dour macro-economic environment appears to have derailed the plans.

However, the group’s revenues rose by a robust 42 percent in the most recent fiscal quarter ended December 31, 2021 to Rs.92.2 billion while the earnings jumped 67 percent to Rs.4.53 billion or Rs.6.04 a share over the same period a year ago.

Hayelys share closed at Rs.98.40, adding Rs.1.40 or 1.44 percent on Wednesday.

ICRA Lanka is of the belief that the group will continue to do better in the ongoing financial year.