Nile Rating, a member of Fitch Ratings, has downgraded the National Senior Unsecured debt rating of Orascom Projects & Touristic Development (OPTD)’s 100 million Egyptian pound ($17.3 million) seven-year, 12.875 percent second bond issue to CCC+ Outlook Negative from B- Rating Watch Negative.
CCC grade ratings denote an "extremely weak credit risk" relative to other issuers or issues in the same country. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic development. The suffix sign indicates relative status within major rating categories.
The downgrade reflects the deterioration in the company's financial performance in year 2001. It takes into consideration the decline in the turnover, which was one of the factors preventing the company from generating positive cash flows. The EBITDA figures it reported were also down to at EP 32.5 million in FY01, compared to EP 35.5 million in FY00.
Meanwhile, the coverage ratio has declined, which was reflected in the EBITDA/net interest ratio reaching 0.7x in FY01. The rating also reflects the negative impact of the September 11, 2001 attacks on the tourism industry, the political instability in the region and the slow down in the domestic real estate sector. All of theses factors have hampered OPTD's business operation.
OPTD was established in 1996 as a joint stock company. The company is considered a pioneer in developing the concept of integrated tourist resorts in Egypt. The Sawiris family holds the majority shareholder in OPTD through direct and indirect shareholdings, with the balance being held by a variety of other Egyptian investors. Currently, OPTD retains majority stakes in three subsidiaries, in addition to minority shareholdings in six affiliates which were originally set up to facilitate OPTD's business operations.
The company's activities include land development, the construction of hotels and residential units for sale and the distribution of support utilities. OPTD controls all aspects of its development projects through its own subsidiaries. These activities are currently focused on two major development projects, El-Gouna, which is located on the Red Sea Coast and Taba Heights, which is on the Sinai Peninsula and is expected to be completed by 2007. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
