LOCAL DEBT watcher Philippine Rating Services Corp. (Philratings) has assigned a PRS A plus rating to Alsons Consolidated Resources, Inc. (ACR) for its proposed issuance of P1.5 billion worth of commercial papers.
The Alcantara-led holding company will be issuing the debt papers out of its shelf registration at the Securities and Exchange Commission of up to P2.5 billion.
Proceeds of the offer will be used to refinance its short-term obligations, set to mature in the second quarter of the year. A portion will also go to the development of its Siguil Hydro power plant. ACR earlier said it will invest up to P1 billion for the power project in Sarangani Province.
In a statement issued over the weekend, Philratings said ACR has an above average capacity to meet its financial commitments when compared to other local firms, but is more susceptible to adverse changes in circumstances and economic conditions than higher-rated companies.
The rating has also been assigned a stable outlook, indicating that it is unlikely to change in the next 12 months.
Philratings took into account the company’s expansion plans and ability to enter into joint ventures in coming up with the credit rating.
The debt watcher however noted that ACR’s profitability has been volatile for the past three years. ACR’s regulatory filing showed that it booked an 8% drop in revenues to P6.52 billion for 2017. The year before that, ACR realized a 42% increase in revenues to P7.01 billion.
In terms of net income, ACR has been on a steady decline. In 2017, consolidated profit fell by 84% to P103 million. Meanwhile in 2016, consolidated net income went down by 8% to P636 million.
The company’s power projects are also mostly located in Mindanao, which currently has an oversupply of power.
In addition to this, ACR underwent debt restructuring in 2010 and 2014. All outstanding debt were settled in 2015.
“PhilRatings shall continuously monitor developments relating to ACR and may change the rating at any time, should circumstances warrant a change,” the debt watcher said.
Incorporated in 1974 originally as Victoria Gold Mining Corp., ACR was able to establish itself as an investment holding company in 1996. Its core business is in energy, power, and property development. Its investments in power include Western Mindanao Power Corp., Southern Philippines Power Corp., and Mapalad Power Corp., all located in Mindanao.
ACR booked a 1.8% increase in revenues to P1.68 billion in the first quarter of 2018, as it recorded lower financial charges following the settlement of some short-term debt and prepayment of a portion of long-term debt. Net income went up 26% to P103.14 million for the period. — Arra B. Francia
CORRECTION: An earlier version of this story stated that Alsons Consolidated Resources, Inc. (ACR) bagged PRA rating from Philippine Rating Services Corp. (Philratings). It should have been PRA plus. We apologize for the error.
