QIA has veto rights, notes S&P
Adani Electricity Mumbai Ltd (AMEL), supported by Qatar Investment Authority (QIA) Rs.20 billion loan, will manage its growth with minimal project execution risks.
AEML is expected to maintain its working capital position such that debt does not increase materially beyond expectations over the next 12-18 months, said S&P Global Ratings on 4 August 2020.
AEML is an integrated Mumbai utility. It has almost 70% market share of the distribution network in Mumbai, one of the most economically developed cities in India.
“We treat the Rs.20 billion shareholder affiliate loan solely provided by QIA as equity for AEML’s adjusted ratios,” said the rating agency.
“Although QIA’s 25% stake in AEML does not meet the minimum threshold under our non-common equity financing criteria, we analyze the shareholder affiliate loan under these criteria using an exception to the 40% controlling ownership threshold.
“This is because we believe QIA has veto rights on key corporate decisions that reflect equity rights more consistent with those of a controlling equity owner and the loan documentation has several mechanisms that significantly reduce QIA’s ability to exercise its creditor rights.”
S&P anticipates the company to continue its steady operating performance.
On 4 August 2020, S&P Global Ratings had affirmed its ‘BBB-‘ long-term issuer credit rating on AEML and the ‘BBB-‘ long-term issue rating on the company’s senior secured notes. #QIA #AEML #Mumbai #Electricity #India /fiinews.com
