Johannesburg, 03 March 2014—Global Credit Ratings has today placed the long term national scale and the short term national scale issuer ratings assigned to Dana Group of Companies Plc of BB+(NG) and B(NG) respectively on Rating Watch; The N8.01bn Series 1 Bond national scale rating of BB+(NG) has also been placed on Rating Watch.
Global Credit Ratings has placed the above credit rating(s) of Dana Group of Companies Plc (“Dana Group” or “the Group”) on Rating Watch due to the following recent developments:
A court petition was published by United Bank for Africa Plc (“UBA”) against Dana Motors and other Dana Group companies in Thisday Newspaper of February 26, 2014. The Petitioner alleged that an import finance facility and overdraft of US$10m and N50m respectively were availed to Dana Motors by an offer letter dated September 23, 2011. UBA alleged that Dana Motors failed to liquidate its outstanding indebtedness and also alleged that the outstanding loan balances as at 4th October 2013 were N1,322,744,216 and US$20,539 respectively.
While Dana Motors is fully independent from the consolidated Dana Group rated by GCR, the petition claims that Dana Plastics, Ashmina Ltd, Dana Drugs and Dana Pharmaceuticals (all components of the Dana Group) executed a deed of guarantee in respect of Dana Motors’ borrowings. The petition claims that through the guarantee, the joint respondents or guarantors are unconditionally liable to repay the alleged indebtedness on demand and UBA has included a petition for winding up of the guarantors.
Dana Group’s Management has stated that the Group has no direct exposure whatsoever to UBA and that the Group would respond to the allegation at a court hearing slated for Wednesday, 5th March, 2014. GCR expects to receive further details from Dana Group’s Management following the outcome of the court hearing.
GCR has thus placed the ratings on Rating Watch pending the outcome of the court hearing. The Ratings will be reviewed by 5/2014 although this could be sooner should a timeous resolution of the dispute be achieved. Alternatively, any findings that are deemed adverse to Dana Group could have a negative impact on the Group’s Issuer and Bond credit ratings, necessitating an earlier rating review.
NATIONAL SCALE RATINGS HISTORY
Initial rating (Oct/2010)
Long term: BBB-(NG);
Short term: A3(NG);
Last rating (Aug/2013)
Long term: BB+(NG);
Short term: B(NG);
N8.01bn Series 1 Bond: BB+(NG)
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APPLICABLE METHODOLOGIES AND RELATED RESEARCH
GCR’s Global Master Criteria for Rating Corporate Entities
Dana Group of Companies Rating Report, Aug 2013
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Dana Group of Companies Limited participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence.
The “Rating Watch” has been disclosed to Dana Group of Companies Limited.
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