(The following statement was released by the rating agency)
Oct 09 - Fitch Ratings has maintained Ankara-based construction company Yuksel Insaat A.S.'s
(YI) 'B-' Long-term foreign currency Issuer Default Rating (IDR) and senior unsecured ratings on Rating Watch Negative (RWN). Fitch has also maintained YI's USD200m outstanding notes maturing in 2015 'B-' rating at Recovery Rating of 'RR4' on RWN.
The maintained RWN reflects Fitch's continued concern about the company's leverage, which is still more than 4.0x Fitch adjusted gross debt/EBITDAR (5.3x as at FYE 2011), causing YI to exceed a 4:1 leverage bond covenant at the end of 2011. As at H112, YI still exceeded the 4:1 bond covenant, which restricts the company ability to incur additional debt. Fitch believes that this limits YI's financial flexibility and may lead to it facing possible short-term liquidity pressure. Although most of the investment plans are already completed for 2012, Fitch believes that the USD49m cash balance as of end-June (USD108m FYE11) does not provide a comfortable liquidity cushion against possible economic downturns, delays in advance payments, increasing WC needs or for additional capex needs.
Fitch considers the new financing plans for Izmir Otoyol project positive for YI's short-term cash position. However, even if the equity contribution required from YI for the first phase of the project has decreased, the agency still believes future investment needs in the Izmir Otoyol project will burden YI's liquidity. Although, the recent capital injection by shareholders (USD7.5m in September 2012) has mitigated YI's short term liquidity needs. However, Fitch believes the remaining portion (USD22.5m) of the injection could be delayed, depending on the success of the asset disposal plans at the parent level.