Quintis drops 36 per cent on downgrades

Ratings agencies Moody’s and S&P have downgraded the debt of agribusiness Qunitis, while private equity fund Black Rock revealed it had taken a 5.1 per cent stake in the company.

Moody’s re-rated Qunitis's corporate and senior secured debt from B2 to B3, a speculative grade with high credit risk, while S&P moved the corporate and secured noted rating from B+ to B.

Both put the embattled sandalwood seller on negative watch, with shares in Quintis crashing 35.9 per cent to 29.5 cents each.

To put that in perspective, Quintis closed Tuesday at a price of around $1.07 per share, with the company admitting on Wednesday that a subsidiary had lost a contract to supply Nestle in December.

The huge fall will not be welcome for New York-base private equity player Black Rock.

The fund manager revealed today it had bought 20 million shares in Quintis over a five-month period as the company's price descended, starting at $1.66 per share on January 13 and with a final parcel of 6112,000 shares at 72 cents each on Wednesday.

All up, Black Rock took a 5.1 per cent stake.

A rough week, a rough year

It was on Wednesday that Quintis said it had only just become aware its Santalis Pharmaceuticals business had lost a contract supplying Galderma, a subsidiary of Nestle.

That followed a newspaper report on Wednesday morning that said the contract had been discontinued, with sales from the contract, inked in 2014, not factored into its financial projections.

Quintis chairman Dalton Gooding described it as a communication breakdown, which he said was unacceptable.

In March, the company said Chinese timber buyer Shanghai Richer Link, with which Quintis had a sales contract, had not ordered any timber in 2017.

That was followed by a negative report by US-based short seller Glaucus Research accusing the company of being a Ponzi scheme, and founder Frank Wilson left the business to participate in a potential takeover.