ICRA Lanka revises and suspends troubled MTD Walker’s rating

ICRA Lanka Limited, a group company of Moody’s Investors Service, has further revised down the rating of debt-saddled construction firm MTD Walkers and also suspended the rating of the company.

ICRA Lanka revised the issuer rating assigned to MTD Walkers to (SL) C, from (SL) B-, with a Negative Outlook.

ICRA Lanka has also revised the issuer rating assigned to MTD Walker’s senior unsecured redeemable debenture programme of Rs.3.0 billion to (SL) C, from (SL) B-, with a Negative Outlook.

Further, the rating agency has suspended both these ratings, as MTD Walkers has not provided the requisite information to carry out the surveillances of these ratings. 

Since last May, both MTD Walkers and its debenture issue have been subjected to several rating downgrades by ICRA Lanka, on the firm’s weak profits and increasing debt. 

On May 30, ICRA Lanka downgraded MTD Walkers and its Rs.3.0 billion debentures to BB-, from BB+, with a Negative Outlook.

As at December 31, 2018, MTD Walkers was sitting on a whopping Rs.26 billion debt pile, of which Rs.22 billion was short term. The group further had Rs.8.5 billion of supplier credit. 

The group has Rs.18 billion receivables from projects and another Rs.1.0 billion each in cash and financial assets, which can be converted into cash relatively easily. 

The group’s debt restructuring efforts this January, by way of an asset transfer to its Malaysian parent, came to an abrupt halt after eight local banks filed cases against the group, obtaining enjoining orders against the move, until it settles dues.  

For the nine months of FY18/19, the MTD Walkers group’s net loss widened to Rs.3.18 billion, from a net loss of Rs.2.03 billion reported for the same period, last year.