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04/06/18 12:51

Moody's gets Moby and CIN-Tirrenia into troubles

The credit rating Agency downgrades Onorato group: bonds value has drastically dropped, financial speculation might come up. The company: “Markets reflect the Italian uncertain political and economic climate”

As reported by Ship2Shore, Financial statement 2017 didn't particularly influence investors at Luxembourg Bourse, where the 300 million Euro bond issued in early 2016 by Moby group (encompassing namesake shipping company, CIN Tirrenia, Toremar, Sr. Peters Line, terminal and towage operation businesses) is listed.

Between the end of April and May the value recorded 91% while it dropped by mid May going down to current 78%, starting appealing various financial analysts, ready to launch a massive takeover.

On May 14th Moody's determined to downgrade the company's bonds and the whole Onorato group to B3 (corporate family rating and probability of default rating).

Moody's is particularly worried about Moby's liquidity ratio, operational management and other circumstances.

The rating Agency pinpoints how the positive results achieved in 2017 were influenced by two exceptional transactions (the sale of two ships), how the highly competitive market the group is operating in (particularly Sardinia) might affect future income prospects and how the time lines envisaged to reach break even, on initiatives started in 2017, could be longer than expected.

The whole situation has been further hurt by the uncertain antitrust procedures in Italy and Europe.

Moby and Tirrenia were recently sanctioned to pay 29 million Euro (the group confides cancelling the sanction by appealing to TAR) for abuse of dominant position.

Further concerns are generated by the DG Competition procedures regarding state subsidies granted former state-owned Tirrenia, privatization and sale to CIN and the convention which set 72.7 million Euro annual subsidy for the public service granted by the company.

Although being aware of the fact that CIN intends deducting the sanction from the overall 180 million Euro they still owe the Italian state, Moody's is worried about the sanction (which could be exceeding 180 million Euro), about payment deadline and Brussels' potential order to downsize  former subsidy.

Consequently CIN's potential to generate revenue would be hurt and so will be the whole group.

Moby's 2017 financial statement recorded 10 million Euro loss.

Furthermore the 60 million Euro loan dating back to 2016 has almost finished, not to forget the ownership's private affairs (Vincenzo Onorato was granted a loan to buy an apartment) when the company's financial profile was already deteriorating, also considering ongoing (Ernst&Young)  doubts regarding business continuity.

 

Andrea Moizo

Nicola Capuzzo

 

The company: “Markets reflect the Italian uncertain political and economic climate”

 

“Moody’s statements must be read in current uncertain financial climate in Italy, which has been recently affected by the assessments of the international community”, commented Francesco Greggio, CFO of the group.

Furthermore, according to Moby's manager, the shipping market and particularly the specific sector Moby group is serving can be hardly understood and is often not consistent with real prospects.

“Moby group particularly grew and developed in terms of business quantity and quality, as shown  by the growing Ebitda (+13.3 millions considering 23 millions invested in new start up initiatives whose results will appear in the near future).

In the meantime Banks granted Moby a higher debt-ebitda ratio to support development projects for the whole 2018 (versus an interest rate increase on debt, Ed).

 

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