Johannesburg, 24 Apr 2014 — Global Credit Ratings has today accorded an initial national scale long term rating to Nampak Products Limited of A(ZA), and simultaneously affirmed the national scale short term rating of A1(ZA); with the outlook accorded as Stable.
Global Credit Ratings has accorded the above credit rating(s) to Nampak Products Limited based on the following key criteria:
Nampak Products Limited’s (“Nampak Products”) ratings are underpinned by an explicit, unconditional and irrevocable guarantee provided by its parent Nampak Limited (“Nampak”) in respect of the company’s R2bn DMTN programme, and explicit, unconditional and irrevocable guarantees amounting to R3.7bn (reduced from R5.4bn previously, as certain external loans were repaid) in favour of various banking counterparties. Nampak’s national scale long and short term issuer ratings of A(ZA) and A1(ZA) respectively were affirmed by GCR in March 2014, with a Stable outlook accorded. The purpose of the guarantees is to place noteholders in respect of any issues under the DMTN programme (and other lenders, as stipulated by the bank guarantees) in the same position as they would have been had the group been the issuer or debtor, and rank pari passu with other Nampak obligations. The company is a wholly-owned subsidiary of Nampak that owns various local and regional packaging entities, which contributed around 80% of group turnover and 65% of attributable earnings over the review period. Its strategic importance to Nampak is therefore further supportive of the rating alignment.
As Nampak Products’ ratings are underpinned by Nampak guarantee(s), migration of the parent’s issuer ratings would likely trigger an upgrade or downgrade. In addition, material deterioration in Nampak Products’ operational performance or business fundamentals would place downward pressure on the company’s ratings.
NATIONAL SCALE RATINGS HISTORY
Initial rating (07/2004)
Long term: n.a; Short term: A1(ZA)
Last rating (06/2013)
Long term: n.a; Short term: A1(ZA)
Sector Head: Corporates
APPLICABLE METHODOLOGIES AND RELATED RESEARCH
GCR’s Criteria for Rating Corporate Entities, Updated August 2013
Nampak Limited rating report, 2014
Nampak Products Limited rating reports, 2014-2013
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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.
Nampak Products Limited and its parent Nampak Limited participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The credit rating/s has been disclosed to Nampak Products Limited with no contestation of the rating.
The information received from Nampak Products Limited and other reliable third parties to accord the credit rating included the 2013 audited annual financial statements (plus four years of comparative numbers), copies of guarantees in favour of various banking counterparties and noteholders, corporate governance and enterprise risk framework, capital management policy, industry comparative data, regulatory framework and a breakdown of facilities available (including related counterparties). In addition, information specific to the rated entity and/or industry was also received.
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GCR accords an initial rating of A(ZA) to Nampak Products Limited; Outlook Stable.