Caribbean Information and Credit Rating Services (CarCris) has lifted its outlook on Poly Pet Company Limited to “stable from negative”, citing the Jamaican manufacturer’s successful refinancing of up to $1 billion in bonds as a turning point for the company’s liquidity position.
“The stable outlook reflects the high likelihood that the successful refinancing … has materially reduced refinancing risk and improved the company’s medium-term liquidity position,” stated CariCris in its latest filings this month.
Poly Pet controls about “70 per cent” of Jamaica’s plastic bottle manufacturing market, serving mostly domestic customers, with a small distribution operation in Barbados, according to CariCris. Its shareholders are Anthony Brown with 40 per cent, Shane Brown, 40 per cent, and Tamara Phang, 20 per cent. The company was formed in 2006 and is based in Kingston.
The ratings upgrade reflects reduced refinancing risk following bondholder approval in February of a three-year extension on debt originally due on December 23, 2025. The extended maturity now runs to December 23, 2028, though at a higher cost — the coupon rate increases to 10 per cent from 7.5 per cent.
The move marked a revision from the “Poly Pet Rating Downgrade” in January. The extension provides the company with breathing room to execute operational improvements and strengthen its balance sheet ahead of the next refinancing cycle.
CariCRIS, the region’s primary credit rating agency, indicated it will conduct a rating review of Poly Pet in the “coming months”.
The higher coupon rate represents a trade-off bondholders demanded in exchange for extending the maturity. While the 250-basis-point increase will pressure Poly Pet’s interest expense, the company avoided the scenario of principal payment.
In December 2020, the company issued a five-year, $1-billion senior secured bond, raising $800 million to refinance bank debt and support working capital, CariCris stated on its page on the company. The remaining $200 million came subsequently at around 2021 to fund new machinery, expand its product range, and provide further capital support.
business@gleanerjm.com
