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Fitch: Probe into Future Land Chairman Has No Immediate Impact on Ratings
January 26, 2016 / 7:38 AM / 2 years ago

Fitch: Probe into Future Land Chairman Has No Immediate Impact on Ratings

(The following statement was released by the rating agency) HONG KONG, January 26 (Fitch) Fitch Ratings does not expect the investigation into Future Land Development Holdings Limited's (B+/Stable) chairman to have any immediate impact on the ratings of the company, as the company does not face pressure for early redemption of its outstanding debt and the company's liquidity position remains sound. Fitch does not expect Future Land's shareholding structure to change, and therefore the change-of-control covenants for its various offshore bonds are not likely to be triggered. Mr. Wang and his affiliates or trust together own 72.56% of the issued share capital of Future Land, and Mr. Wang's family has confirmed that the shares have not been pledged for loans or other obligations. There has been no technical default on any of Future Land's offshore loans and bonds. The offshore USD150m term loan facility is the only debt requiring Mr. Wang to remain as chairman. The company said it has not and will not consider using the facility until there is greater clarity about the investigation into Mr. Wang. Future Land said on 22 January 2016 that Wang Zhenhua, its executive director, chairman and ultimate controlling shareholder, is currently being investigated by the Commission on Discipline Inspection of Changzhou city's Wujin district. The company said the investigation is related to personal matters and that the directors do not expect it to negatively affect the operations and financial positions of Future Land. Mr. Wang may continue to take part in making decisions about the company's major matters via appropriate means, the company said. However, Fitch will closely monitor Future Land's operations, funding access and its status in relation to debt covenants to determine if negative rating action should follow. Future Land's 'B+' rating is consistent with Fitch's belief that Future Land will maintain its fast asset-turnover strategy targeting middle-class customers and strong market position in the Yangtze River Delta. EBITDA margin will improve to mid-teens in in 2015 due to higher sales contribution from mixed development projects and higher selling prices in 2H15. Fitch expects Future Land's net debt / adjusted inventory to rise to around 37%-38%, as a result of the company's strategy to rapidly expand in the next 12-18 months. Future Land retains flexibility in liquidity with cash to short-term debt ratio likely to be 2x at end-2015. Contact: Vicki Shen Associate Director +852 2263 9918 Fitch (Hong Kong) Limited 19/F Man Yee Building 60-68 Des Voeux Road Central, Hong Kong Fiona Zhang Associate Director +852 2263 9909 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available on www.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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