Tris Rating sees no immediate impact to MINT's ratings with its acquisition of NHH.
Minor International Plc (MINT) has been rated A by Tris with a stable outlook for the company rating and the ratings of its senior unsecured debentures, and rated BBB+ with a stable outlook on its subordinated capital (hybrid) debentures.
MINT's ratings continue to reflect its solid business profile, underpinned by its strong market positions in the hotel and restaurant businesses and diverse sources of income. MINT has a strong portfolio of brands and wide geographic coverage worldwide.
MINT recently announced it completed a tender for acquiring shares of NH Hotel Group SA (NHH) to secure a total of 94.1% of its share capital. The acquisition of NHH, if integrated successfully, will further strengthen MINT's business profile and enhance its long-term growth prospects.
Tris believes the tender offer for NHH will have no immediate impact on MINT's credit ratings.
Tris reports the hotel operator's initial target was to acquire a 50-55% stake in NHH. The higher than expected equity stake and tender offer means MINT must raise more funds to pay for the acquisition.
MINT also has to manage its capital structure to ensure compliance with its financial covenant, limiting the interest-bearing debt-to-equity ratio to a maximum of 1.75 times.
Tris expects MINT will be able to manage its debt ratio so that it complies with the debt covenant.
MINT is in the process of revaluing the assets of NHH to enhance its equity base. It was reported the company plans to issue perpetual debentures to fund the acquisition.
In addition, MINT is in talks with potential strategic partners to divest some shares of NHH. MINT is also considering divesting some assets to third parties, if needed, in order to raise cash.
On a consolidated basis, the company's adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda), including operating-lease-obligations ratio, is forecast to stay at 6-7 times over the next 1-2 years.
Beyond the next two years, MINT's deleveraging plan is expected to lower the ratio of adjusted debt to Ebitda to fall below 6 times, helping to maintain its credit ratings at current levels.
