Tuesday 28 March 2017 by FIIG Research Company updates

Company updates – Adani, DBCT, Downer, Genworth, Genworth Australia and IMF Bentham

In this week’s company updates, coal terminals Adani and Dalrymple Bay receive ratings actions from Moody’s, Downer makes an offer for Spotless Group and we provide updated research reports for IMF Bentham, Genworth and Genworth Australia

Adani Abbot Point Terminal (AAPT)

On 22 March 2017, Moody’s affirmed the credit ratings of Adani Abbot Point Terminal Pty Ltd (AAPT). The outlook remains negative.

Moody’s maintained the negative outlook on AAPT’s credit ratings, which reflects:

  • Its refinancing challenge (AUD977m of debt, 70% of total debt) in November 2018
  • Uncertainty in relation to the outcome of tariff renegotiations with its users (new tariffs are meant to start by 1 July 2017)
  • Recontracting risk associated with Glencore’s contracts (36% of total contracted capacity), which mature in 2020

Moody’s mentioned there could be a positive ratings trend if the tariff renegotiations result in funds from operations (FFO)/debt going above 7% and FFO/interest cover in the low to mid 2x range, with considerable progress in executing a debt refinancing plan.However, the ratings could be downgraded if: 

  • FFO/debt falls below 7%
  • AAPT experiences difficulty in arranging refinancing
  • There is increased risk of a covenant breach under the senior secured documents
  • AAPT does not continue its track record of compliance with environmental regulations
  • There is a non renewal of the contracts with Glencore's subsidiaries in the absence of replacement contracts

Dalrymple Bay Coal Terminal (DBCT)

Moody’s has changed the outlook on DBCT’s credit ratings to stable from negative. The outlook change reflects improved coal market conditions and an expectation that most of the terminal's users will continue to ship volumes at a level so as to maintain the terminal's high utilisation rate (around 80-90%) over the next one to two years.

The regulator now allows DBCT (current regulatory period until 2021) to reset tariffs for its remaining users following default and immediately on contract termination, in order to socialise lost revenue. This is a positive change compared to DBCT’s previous regulatory position, where it had to wait until the earlier of the scheduled termination or the next regulatory reset to change its tariffs.

However, DBCT’s financial profile remains weak, with funds from operations to debt ranging between 6% and 7% – close to the minimum level of 6%.


Downer has made an offer for Spotless Group of around $1.3bn, supported by a $1bn fully underwritten rights issue and debt.

More information is available here.External link - opens in a new window

IMF Bentham

Established in 2001, IMF Bentham Limited is the largest litigation funder in Australia and the first to be listed on the Australian Securities Exchange (ASX: IMF). IMF has a market capitalisation of approximately $310m (as at 23 March 2017).

We have provided an updated research report available here.*External link - opens in a new window

IMF Bentham – new issue announcement

On 24 March 2017, IMF Bentham announced the launch of $18m of fixed rate senior secured notes. The notes are to be consolidated and form a single series with the issuer’s existing $32m senior secured notes due 30 June 2020.

Details are as follows:

Structure Coupon Maturity Capital price
Fixed 7.40% 30 June 2020 $101.00

Key points:

  • The notes have a three year and three month final maturity (30 June 2020), with interest paid semi annually in arrears
  • The notes will be issued at a capital price of 101.00% of face value plus 1.942% of face value in respect to 95 days of accrued interest for the period from, and including, 31 December 2016 (the previous interest payment date) to 5 April 2017 (the issue date)
  • The notes will pay a fixed rate of interest of 7.40% per annum
  • The notes rank as senior secured obligations of the issuer. The nature of the security is detailed in the Information Memorandum (IM) dated 6 April 2016
  • Investors have a put option at par upon a change of control of the issuer
  • The issuer may call some or all of the notes prior to maturity at 101% of face value from 30 June 2019, or at par due to a tax event or clean up call
  • The notes benefit from a covenant package that, amongst others, limits the amount of debt the group can obtain as detailed in the information memorandum
  • The notes are not listed on an exchange or rated by a ratings agency

An ASX announcement is available here.External link - opens in a new window

Genworth Financial Inc.

Genworth provides long term care (LTC) and mortgage insurance (MI) products and services throughout the United States, Canada and Australia. 

We have provided an updated research report available here.*External link - opens in a new window

Genworth Financial Mortgage Insurance Pty Ltd

Genworth Financial Mortgage Insurance Pty Ltd (Genworth Australia) is a leading provider of lenders’ mortgage insurance (LMI) in Australia, wholly owned by USA based parent Genworth Financial Inc.

We have provided an updated research report available here.*External link - opens in a new window

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