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MARC has affirmed the ratings on Radicare Sdn Bhd’s (Radicare) RM100 million CP/MTN facility at MARC-1/A+. The rating outlook is revised to stable from negative.
The rating action incorporates the indefinite extension of Radicare’s concession agreement (CA) granted by the Malaysian government after the expiry of a six-month extension in April 2012. The extension, which will be in force until a new CA is concluded, has eliminated non-renewal risk. MARC understands that Radicare has had a series of negotiations with the government on the terms and scope of works that would be undertaken under the new CA which is pending government’s approval. Radicare currently provides non-clinical support services to 41 government hospitals and six medical institutions under the 15-year CA that had ended on October 27, 2011 before the extensions were granted.
MARC observes that the company has pared down its total borrowings in recent years. Total borrowings which stood at RM118.5 million as at December 31, 2011 (FY2011) declined to RM75.3 million by end-June 2012 and were fully repaid on September 25, 2012. MARC notes that Radicare’s high trade receivables, consisting mainly of payments from the government, have weighed on its working capital requirements. As at June 30, 2012, trade receivables stood at RM209.9 million (FY2011: RM171.3 million). However, sizeable collections were received subsequent to June 2012 which were partly utilised for the payment of its debt obligations, including the early redemption of the RM35 million outstanding under the CP/MTN facility before its maturity on November 9, 2012.
The CP/MTN facility will expire on November 28, 2012, and upon expiry, MARC will no longer provide rating surveillance and will withdraw its ratings.
Strengths Weakness |
