Bulletin: China Hongqiao Rating Not Affected By Proposed Acquisition Of Alumina Company

SINGAPORE (S&P Global Ratings) June 27, 2016--S&P Global Ratings said today that its corporate credit ratings on China Hongqiao Group Ltd. (Hongqiao: BB-/Stable/--; cnBB+/--) are not affected by the proposed acquisition of Chinese alumina producer Binzhou Municipal Beihai Xinhe New Material Co. Ltd. (Beihai Xinhe). Hongqiao could fund the Chinese renminbi (RMB) 2.12 billion acquisition of 100% of Beihai Xinhe with its internal cash flow generation and cash balance (RMB9.0 billion as of Dec. 31, 2015), if the acquisition proceeds. In our view, the acquisition will not have a material impact on our expected cash flow adequacy ratios. Nevertheless, we expect Hongqiao's debt to increase over the next 12 months on high capital spending and stable shareholder returns. We have

...SINGAPORE (S&P Global Ratings) June 27, 2016--S&P Global Ratings said today that its corporate credit ratings on China Hongqiao Group Ltd. (Hongqiao: ##-/Stable/--; cnBB+/--) are not affected by the proposed acquisition of Chinese alumina producer Binzhou Municipal Beihai Xinhe New Material Co. Ltd. (Beihai Xinhe). Hongqiao could fund the Chinese renminbi (RMB) 2.12 billion acquisition of 100% of Beihai Xinhe with its internal cash flow generation and cash balance (RMB9.0 billion as of Dec. 31, 2015), if the acquisition proceeds. In our view, the acquisition will not have a material impact on our expected cash flow adequacy ratios. Nevertheless, we expect Hongqiao's debt to increase over the next 12 months on high capital spending and stable shareholder returns. We have factored in the company's tendency for debt-funded growth over the past few years and over the next 12 months in our negative assessment of its financial policy. Beihai Xinhe, which has facilities in the same locality as...

Bulletin