Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​​

I AGREE
Rating Action:

Moody's assigns B2 corporate family rating to Befesa Zinc, (P)B2 senior secured rating to Zinc Capital, outlook stable

Global Credit Research - 27 Apr 2011

Frankfurt am Main, April 27, 2011 -- Moody's Investors Service has today assigned a B2 corporate family rating (CFR) and probabilityof default rating (PDR) to Befesa Zinc S.A.U. ("Befesa Zinc" or "the company"). Concurrently, Moody's has assigned a provisional rating to the company's proposed issuance of EUR300 million worth of senior secured notes (rated (P) B2), which are issued in the context of a refinancing of the company's existing debt package. The rating outlook is stable. This is the first time that Moody's has rated Befesa Zinc.

The B2 CFR and instrument ratings assume that the proposed EUR300 million bonds issuance closes successfully with the proceeds being used for the repayment of EUR185 million of existing bank debt and an extraordinary dividend payment of EUR90 million, with the remainder being used to cover transaction related costs and partially fund capacity expansion investments.

Moody's issues provisional ratings in advance of the final sale of securities and these reflect the rating agency's credit opinion regarding the transaction only. Upon a conclusive review of the final documentation, Moody's will endeavour to assign a definitive rating to the instrument mentioned above. A definitive rating may differ from a provisional rating, for example due to a different amount of total debt at closing or changes to the underlying terms and conditions of the instruments.

RATINGS RATIONALE

The B2 corporate family rating (CFR) is a reflection of (i) the company's leading market position in a niche market, which in Moody's views benefits from high barriers to entry and (ii) the solid operating performance, which -- due to the company's favorable hedging agreements in place and its business model -- proved to be relatively resilient even during the downturn. The rating furthermore reflects the company's (iii) reliance on one activity; (iv) high customer concentration; (v) high initial leverage of approximately 4.4x debt/EBITDA on a proforma basis; and (vi) the expectation that net debt levels will remain elevated in the mid-term as significant investments into new capacity will result in negative free cash flows. While the company's hedging strategy supports a relatively stable and resilient performance, Moody's also notes certain risks inherent to this strategy, in particular the need and ability to continuously roll over existing hedging contracts at favorable rates. The stable outlook reflects the relative good level of performance visibility in the short to mid-term, which is supported by the company's hedging strategy and our stable outlook for the base metals industry. The outlook assumes that the company is able to maintain a satisfactory liquidity profile and regularly roll over its hedging contracts. There is no headroom in the rating for additional dividend payments in the short- to mid-term.

With revenues of EUR207 million in 2010, Befesa Zinc is of rather small scale but benefits from its leading position in the European market for the recycling of crude steel dust, a niche market with high barriers to entry. Through its crude steel dust recycling activities, Befesa Zinc is able to generate Waelz oxide (WOX, which includes zinc), which is then sold to zinc smelters. While the company is also active in the recycling of stainless steel dust, Moody's notes that Befesa Zinc's performance relies heavily on its crude steel dust recycling business, which contributed approximately 94% of the EBITDA generated in 2010. Approximately 80% of the crude steel revenues are derived from the WOX sales, which would, in absence of a strict hedging policy, expose the company to the volatility of the zinc price. Going forward, Moody's expects Befesa Zinc to be able to benefit from an uptick in steel production and zinc consumption following a severe crisis in 2009. However, while zinc prices recovered strongly after the crisis, they remained volatile in the recent past. In this context, Moody's notes the positive impact of the company's hedging strategy, which supported a relatively stable performance even through the crisis. Befesa Zinc currently has hedging agreements in place that cover major parts of its 2011-2013 zinc sales, which in Moody's view provides for a solid level of short- to mid-term performance visibility. Going forward, Befesa Zinc's ability to roll-over its hedging contracts at favorable rates will be crucial to support revenue growth and margin/cash flow stability. In this context, Moody's notes that Befesa Zinc currently heavily relies on one counterparty, Barclays Bank Plc, which covers more than 80% of the hedging volumes in place.

Moody's views Befesa Zinc's business as relatively resilient, which is to a large degree supported by its hedging strategy, and reflected in the company's ability to generate EBITDA Margins above 30% and solid levels of free cash flow throughout the most recent downturn. With an initial leverage of approximately 4.4x debt/EBITDA (including Moody's adjustments), Befesa Zinc is solidly positioned in the B2 rating category. Moody's does not expect a reduction in net debt levels over the next two years as major investments into capacity expansion programs are likely to result in a negative free cash flow in 2012. While these investments should in the mid-term fuel further top line growth and thus cash flows, the intermediate liquidity profile with EUR59 million cash after the refinancing is somewhat burdened by the investment program. However, Moody's takes comfort from the somewhat flexible execution schedule, which should allow the company to adjust its capital spending if required to offset a temporary shortfall in cash flow generation. In this context, Moody's notes that Befesa Zinc currently has no external source of liquidity in place, e.g. a committed revolving credit facility. Given the lack of external sources of liquidity, Befesa Zinc relies on its operating cash flow generation, which Moody's expects to be relatively stable throughout the year, and to increase over time as a result of favorable demand patterns and capacity expansion.

BZ plans to issue EUR300 million of Senior Secured Notes via an independent stand-alone special finance vehicle Zinc Capital SA, which will be outside the restricted group, and which then passes on the proceeds via a loan to Befesa Zinc. The notes will not be guaranteed and will only indirectly benefit -- through a pledge of the rights of the issuer under the loan agreement -- from share pledges and guarantees. The loan will be a senior obligation of Befesa Zinc that benefits from first priority liens in the capital of the parent and the guarantors. There will be no asset pledges in place. The guarantor group has to -- at any time -- cover 85% of consolidated EBITDA and assets. The EUR300 million senior secured notes (7 year maturity, 2018) will be the only debt instrument in place following the refinancing. Consequently, the (P)B2 rating assigned is in line with the CFR. Moody's waterfall analysis does not include potential liabilities that could arise under an optional EUR20 million revolving credit facility or under the existing hedging agreements (up to EUR150 million). While the former is not yet in place, Moody's notes that the latter is subject to daily fluctuation in the market-to-market value of the hedge portfolio, which could either be positive or negative and thus remains difficult to quantify. Both liabilities would benefit from a super priority position in an enforcement scenario.

Assignments:

..Issuer: Befesa Zinc, S.A.U

.... Probability of Default Rating, Assigned B2

.... Corporate Family Rating, Assigned B2

..Issuer: Zinc Capital S.A

....EUR300M Senior Secured Regular Bond/Debenture, Assigned (P)B2

....EUR300M Senior Secured Regular Bond/Debenture, Assigned a range of LGD4, 50

In order to consider an upgrade to B1, we would expect to see a debt/EBITDA sustainably around 3.0x, a return to free cash flow generation as well as a solid liquidity cushion as reflected by a cash/debt level of around 25% or committed external sources of liquidity at a similar size. In addition, we would also expect to have mid-term visibility with regard to the availability of favorable hedging contracts.

Downward pressure could arise if the company's revenue base or thus profitability weakens below a 30% EBITDA Margin, e.g. driven by a longer term weakening of the zinc price or demand levels, leading to a leverage above 5.0x debt/EBITDA. Failure to maintain adequate liquidity would also be a driver for a negative rating action.

Befesa Zinc's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (ii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside Befesa Zinc's core industry and believes Befesa Zinc's ratings are comparable to those of other issuers with similar credit risk. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published June 2009.

Based in Erandio, Spain, Befesa Zinc, Befesa Zinc is a leading steel dust recycler in Europe. The company is specialized in the recycling of steel dust (a form of steel residue generated in the production of steel from the processing of scrap steel) and stainless steel dust. The company's primary activities are the collection and recycling of steel dust and stainless steel dust, as well as the production of waelz oxide. Befesa Zinc currently operates six plants in four countries, has approximately 400 employees and generated revenues of EUR207 million in 2010.

Befesa Zinc is a wholly-owned indirect subsidiary of Befesa Medio Ambiente S.A., an industrial group involved in the industrial waste recycling and water sectors. Befesa Medio Ambiente is 97.4% owned by Abengoa S.A., a vertically integrated environment and energy group (rated Ba3, stable), which recently announced its intention to launch a tender offer for the remaining shares in Befesa Medio Ambiente, which would result in a delisting of Befesa Medio Ambiente.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of assigning a credit rating.

The rating has been disclosed to the rated entity or its designated agents and issued with no amendment resulting from that disclosure.

Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entity or its related third parties within the three years preceding the Credit Rating Action. Please see the ratings disclosure page www.moodys.com/disclosures on our website for further information.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Frankfurt am Main
Sabine Renner
Asst Vice President - Analyst
Corporate Finance Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Frankfurt am Main
Matthias Hellstern
Senior Vice President
Corporate Finance Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's assigns B2 corporate family rating to Befesa Zinc, (P)B2 senior secured rating to Zinc Capital, outlook stable
No Related Data.
© 2018 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be reckless and inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.