Softlogic Holdings to raise Rs 2 billion via commercial papers – Reuters
Softlogic Holdings PLC has offered to raise Rs 2.0 billion through rated commercial paper as the company seeks to refinance most of its debt given its heavy reliance on debt for expansion and acquisitions.
Although it was not immediately clear what the funds were used for and when the company would issue the commercial paper, the company was primarily dependent on refinancing its debt, as it has a strong repayment history and good relationship with banks and other donors.
ICRA Lanka Limited has assigned SL A3 rating to the commercial paper.
Commercial papers are generally short-term debt securities, which have maturities of 3 to 6 months and are generally issued by entities with good credit ratings.
The company has a BBB rating with a negative outlook, confirmed in January by ICRA Lanka given the resilience of performance in some of the group’s key segments such as healthcare, retail, telecommunications and insurance , albeit under tight market conditions.
But the rating agency noted the group’s high debt levels as a rating concern.
“ICRA Lanka notes that the holding company’s higher debt levels are largely attributable to the financial support provided to the group’s retail and leisure sectors,” the rating report said. “ICRA Lanka also notes that SHL is heavily dependent on refinancing of its debts, thereby exposing the company to refinancing risk,” it added.
Softlogic Group recorded strong financial performance for the three months ended December 31, 2021, its third fiscal quarter thanks to the exceptional performance of its retail activities. The group reported a net profit of 1.25 billion rupees for the quarter, compared to 52.25 rupees for the same period in 2020 on revenues of 31.9 billion rupees, up 45%. Its extensive retail business generated revenue of Rs 16.9 billion, up 44%. Despite the company’s higher debt levels and reliance on rolling over debt, ICRA Lanka said recent increases in the share prices of its group entities have also increased its refinancing flexibility. . “This reconfirms the intrinsic value of the group which therefore increases accessibility to lines of financing”, they added.