Chase Wins Bb Credit Rating
Sydney Morning Herald
Thursday January 14, 1988
The credit rating of New Zealand-based entrepreneurial group Chase Corporation Ltd has been boosted by the emergency measures the company has taken to overcome the impact of the stockmarket crash.
Australian Ratings Pty Ltd has given Chase a BB rating for unsecured loans of up to three years, after indicating last November that the group would be rated three places lower at single B.
The improvement is not technically an upward rating because this is the first time a full credit analysis has been conducted by Australian Ratings.
The Melbourne-based ratings agency bestowed a BB because Chase has moved to consolidate and cash-up over the past three months.
The moves include bidding for full ownership of its US offshoot, Entregrowth International Ltd, Australian resources arm Botena Investments Ltd, and Hong Kong subsidiary Chasia Property and Investment Ltd.
There also has been the sale of the UK offshoot Chase Property Holdings Plc, a strategic stake in investor Westmex Ltd and an undertaking to limit new property developments.
Chase's executive chairman, Mr Colin Reynolds, said the new rating"continues to understate the company's creditworthiness".
"However, we accept that the report was completed during a period of volatile and uncertain market conditions," he said.
Mr Reynolds said, however, that the rating confirmed that actions taken by directors following the crash had strengthened the balance sheet and improved the cash flow.
Australian Ratings initially considered rating Chase late in 1986, but instead issued a credit surveillance report.
It published a preliminary single B rating, along with significant downgradings of a group of entrepreneurs, several weeks after last October's market crash.
The initial rating was issued because Chase was considered to have a large degree of exposure to share investments.
However, its new strategy has seen moves either to own fully or sell out of listed subsidiaries and associate companies in an attempt to boost cash flow and reduce debt.
© 1988 Sydney Morning Herald
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