S&P downgrades Quintis rating

Global ratings agency S&P has cut its credit rating for Quintis for the second time this month and kept the troubled Indian sandalwood producer on credit watch with negative implications, suggesting another downgrade is possible.

S&P said today it had taken the view that Quintis’s continued delays in confirming its sandalwood sales to Chinese customers had increased the risks that investor inflows to the plantation business could be “materially lower” for the company.

“This risk, combined with the prospect of the $37 million option on 400 hectares being put back to the company, has heightened the probability of the company’s liquidity becoming stressed,” S&P said.

“Should this delay in Quintis’s Indian sandalwood sale continue, we believe it will be more challenging for the company to attract investor inflows over the last two weeks of June, when most of the investor cash flows occur.

“As a result, we are lowering the rating on Quintis to CCC+ from B, and placing them on credit watch with negative implications.”

This follows a cut from B+ earlier this month, when Moody’s also cut the company's credit rating, from B2 to B3.

S&P said it would resolve the credit watch by the end of next month, once it had greater clarity regarding investor inflows and sandalwood sales to China.

It also said it disregarded the prospect of corporate transactions between Quintis and undisclosed interested parties, but would take any new information into account when it resolves its credit watch next month.

Quintis shares remain locked in a trading halt until next Wednesday, while it assesses potential “debt and equity transactions from more than one party”.