PRESS RELEASE: Fitch Rates Sri Lanka's DSI's Proposed Notes 'BBB
(lka)'; Outlook Stable
The following is a press release from Fitch Ratings:
Fitch Ratings-Colombo/Mumbai/Singapore-04 November 2009: Fitch Ratings has
today affirmed DSI Holdings Limited's (DSIHL) National Long-term rating, as well
as its outstanding senior unsecured notes at 'BBB+(lka)'. At the same time, the
agency has assigned a 'BBB+(lka)' National Long-term rating to DSI Holdings
Limited's (DSIHL) proposed senior unsecured debentures of up to LKR800m. The
Outlook is Stable.
Proceeds from the notes issue will be used to refinance the LKR270m long-term
debt, and fund its existing working capital. Hence, the proposed debt issue is
not expected to materially change DSIHL's total debt balance. As at end
September 2009, DSIHL's total debt amounted to LKR2.2bn, of which about 77%
comprised of short-term loans and overdrafts. Of the total LKR510m worth of
long-term debt, about LKR270m was due to mature within a year. DSIHL's liquidity
position is supported by about LKR370m of undrawn facilities and LKR120m in cash
as at September 2009.
DSIHL's leverage, measured by adjusted net debt/operating EBITDAR, improved to
3.3x in FY09 compared to 3.6x in FY08. The improvement in FY09 stemmed from an
increase in sales of 12%, primarily driven by footwear price increases. DSIHL's
interest coverage, measured by EBITDA/net interest, declined marginally to 1.7x
in FY09 from 1.8x in FY08, due to a system wide increase in interest costs.
Fitch expects DSIHL to maintain its credit metrics without much deterioration,
given the relative stability in basic footwear sales (80% of DSIHL's revenues)
and declining interest rates on borrowings.
The ratings reflect DSIHL's position as Sri Lanka's largest manufacturer and
retailer of footwear, and its strong brand franchise. DSIHL currently benefits
from high import duties aimed at protecting the domestic footwear industry,
which significantly lowered competition from imports. DSIHL's ratings are
constrained by the financial profile of its parent, D Samson Group (Pvt) Ltd,
which has a weaker stand-alone financial profile than DSIHL's.
Contacts: Shahim Zubair, Colombo, +94 11 251 900/ shahim.zubair@
fitchratings.lk; Sahan Jayasooriya, +94 11 251 900/ sahan.jayasooriya@
fitchratings.lk.
Note to editors: Fitch's National ratings provide a relative measure of
creditworthiness for rated entities in countries with relatively low
international sovereign ratings and where there is demand for such ratings. The
best risk within a country is rated 'AAA' and other credits are rated only
relative to this risk. National ratings are designed for use mainly by local
investors in local markets and are signified by the addition of an identifier
for the country concerned, such as 'AAA(lka)' for National ratings in Sri Lanka.
Specific letter grades are not therefore internationally comparable.
Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215, Email:
shivani.sundralingam@fitchratings.com.
Additional information is available at www.fitchratings.com.
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PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://
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AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC
WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES
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(END) Dow Jones Newswires
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