Fitch Ratings has maintained Russia-based JSC TransContainer's Issuer Default Rating (IDR) on Rating Watch Negative (RWN). A full list of rating actions is at the end of this comment, Reuters reports. TransContainer's 'BB+' Long-term IDR currently includes a one-notch uplift for parental support from JSC Russian Railways (RZD, 'BBB'/Stable/'F3'), its majority shareholder. The maintained RWN reflects RZD's decision to further reduce its stake in TransContainer and uncertainty remains regarding the percentage of shares to be disposed, the timing of the disposal given that it is no longer expected to occur by the end of 2011, and the identify of the future majority shareholder.
RZD's intention is to dispose of a 25% stake in TransContainer but maintain a 25% +1 share stake. However, the Russian government, RZD's sole shareholder, is now considering plans for RZD to fully divest its stake in the company. Discussions between RZD and the Russian government are still ongoing and a final decision regarding the precise dilution of RZD's stake is not expected until the end of 2011.
The agency emphasises that TransContainer's ratings may be impacted by the relative credit strength of a new majority shareholder and the parent-subsidiary arrangements put in place, including the effect of possible acquisition funding. To resolve the RWN, Fitch will therefore seek clarification about the new ownership structure and details of any acquisition financing.
The one-notch uplift for parental support from RZD applied to TransContainer's ratings is in accordance with Fitch's Parent-Subsidiary Rating Linkage methodology. The agency recognises the moderate operational and strategic ties between TransContainer and RZD, whose intentions to maintain a 25% stake implies a continued commitment to TransContainer and its perceived importance to RZD in terms of strategy and operations.
TransContainer's standalone rating continues to reflect its market position as the leading rail container operator in Russia, geographical reach and relatively diversified customer base. As at 30 June 2011, the company owned c.60% of total flatcars in Russia and holds an estimated 52% of all rail container transportation. It owns and operates more than 24,000 flatcars and c.60,000 containers. Leverage of <2.0x net adjusted debt/EBITDA as at H111 is considered commensurate with the standalone 'BB' rating. Fitch expects this ratio to remain below 2.0x in the medium term.
The rating actions are as follows:
Long-term IDR: 'BB+'; RWN maintained
Short-term IDR: 'B'; Affirmed
Local currency long-term IDR: 'BB+'; RWN maintained
Local currency short-term IDR: 'B'; Affirmed
National Long-term rating: 'AA'(rus)'; RWN maintained
Senior Secured Rating: 'BB+'; RWN maintained
RZD's intention is to dispose of a 25% stake in TransContainer but maintain a 25% +1 share stake. However, the Russian government, RZD's sole shareholder, is now considering plans for RZD to fully divest its stake in the company. Discussions between RZD and the Russian government are still ongoing and a final decision regarding the precise dilution of RZD's stake is not expected until the end of 2011.
The agency emphasises that TransContainer's ratings may be impacted by the relative credit strength of a new majority shareholder and the parent-subsidiary arrangements put in place, including the effect of possible acquisition funding. To resolve the RWN, Fitch will therefore seek clarification about the new ownership structure and details of any acquisition financing.
The one-notch uplift for parental support from RZD applied to TransContainer's ratings is in accordance with Fitch's Parent-Subsidiary Rating Linkage methodology. The agency recognises the moderate operational and strategic ties between TransContainer and RZD, whose intentions to maintain a 25% stake implies a continued commitment to TransContainer and its perceived importance to RZD in terms of strategy and operations.
TransContainer's standalone rating continues to reflect its market position as the leading rail container operator in Russia, geographical reach and relatively diversified customer base. As at 30 June 2011, the company owned c.60% of total flatcars in Russia and holds an estimated 52% of all rail container transportation. It owns and operates more than 24,000 flatcars and c.60,000 containers. Leverage of <2.0x net adjusted debt/EBITDA as at H111 is considered commensurate with the standalone 'BB' rating. Fitch expects this ratio to remain below 2.0x in the medium term.
The rating actions are as follows:
Long-term IDR: 'BB+'; RWN maintained
Short-term IDR: 'B'; Affirmed
Local currency long-term IDR: 'BB+'; RWN maintained
Local currency short-term IDR: 'B'; Affirmed
National Long-term rating: 'AA'(rus)'; RWN maintained
Senior Secured Rating: 'BB+'; RWN maintained