Johannesburg, 11 October 2013 — Global Credit Rating Co. (“GCR”) has accorded a final, public long term ‘A(ZA)(sf)’ / Stable Outlook ratings to the following Senior Secured Notes on 11 October 2013 issued by Adcorp Holdings Limited (“Adcorp”) on 31 July 2013:
• ZAR 100m, Secured Term Notes, stock code ADCB02, coupon 3M JIBAR + 2.250%, due 31 July 2016.
Concurrently, GCR has accorded a final, public short term ‘A1(ZA)(sf)’ credit ratings to following Secured Commercial Paper on 4 October 2013 issued by Adcorp Holdings Limited (“Adcorp”) on 10 September 2013:
• ZAR 100m, Secured Commercial Paper, stock code ADCP03, coupon 5.373%, due 10 December 2013.
Concurrently, GCR has affirmed the final, public long term ‘A(ZA)(sf)’ / Stable Outlook ratings of the following Senior Secured Notes:
• ZAR 400m, Secured Term Notes, stock code ADCB01, coupon 3M JIBAR + 2.490%, due 8 March 2018;
The rating of the Senior Notes is derived by applying a notching approach, starting from the long term unsecured corporate credit rating of Adcorp (‘BBB(ZA)’) with a rating uplift of three national scale notches deemed appropriate for the Senior Notes. The ratings of Secured Term Notes and Secured Commercial Paper incorporate the recoveries from the ceded trade receivables. The ratings accorded to the Senior Notes relate to the ultimate (as opposed to timely, akin to a loss severity rating therefore) repayment of the principal and interest.
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Head of Structured Finance
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APPLICABLE METHODOLOGIES AND RELATED RESEARCH
Global Summary Structurally Enhanced Corporate Bonds Rating Criteria (February 2013)
Global Master Criteria for Rating Corporate Entities (August 2013)
Adcorp Holdings Limited Rating Report (December 2012)
The ratings above were solicited by the Arranger of the Transaction; GCR has been compensated for the provision of the ratings.
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SALIENT FEATURES OF ACCORDED RATINGS
GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for a maximum of 12 months, or earlier as indicated by the applicable credit rating document.
The Issuer and the Arranger participated in the rating process via face-to-face meetings, teleconferences and other written correspondence. Furthermore, the quality of info received was considered adequate and has been independently verified where possible.
The rating/s above were solicited by the Issuer of the Transaction; GCR has been compensated for the provision of the ratings.
The credit rating/s has been disclosed to the Issuer and the Arranger with no contestation of the rating.
The information received from the Arranger / Issuer:
• Historical trade receivables data of the portfolio to be secured from January 2008 to July 2013.
• Debtors aging statistics for the abovementioned period.
• Provisions for bad debts and actual write-offs from provisions for the abovementioned period.
• Monthly collections for the abovementioned period,
• Audited financial statements of the Issuer for the year ended 28 February 2013 and year-to-date management accounts.
• Adcorp Holdings Credit Policy, credit application and terms & conditions.
• Compliance Certificate dated 22 August 2013.
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