No impact on Tenaga's debt ratings from Integrax takeover, says RAM

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KUALA LUMPUR (Jan 15): State-controlled utility Tenaga Nasional Bhd's takeover offer for Integrax Bhd will have no impact on the acquirer's debt ratings, RAM Ratings Services Bhd said.

In a note today, RAM said the acquisition of the remaining 77.88% stake in port operator Integrax (fundamental score: 1.65; valuation score: 0.6) would cost Tenaga (fundamental score: 1.3; valuation score: 1) RM644.2 million, which is considered insignificant to its key financial metrics.

“TNB’s (Tenaga) gearing ratio and funds from operations debt coverage are expected to stay intact at around 0.62 time and 0.48 time, respectively, whether the takeover is funded by raising additional debt or by internal cash,” said RAM.

RAM has a "AAA/Stable" rating on Tenaga.

RAM expects synergistic benefits to arise from the takeover as Tenaga would have more control over Integrax's port operations at the Lekir Bulk Terminal Sdn Bhd (LBT) and Lumut Maritime Terminal Sdn Bhd (LMT).

RAM said LBT was the sole provider of coal-handling and delivery services to Tenaga's coal-fired plants in Manjung, Perak, while LMT was the sole operations and maintenance provider for LBT.

“While TNB’s effective shareholding in LMT is expected to increase, we understand that the latter’s business and operations will remain intact, with no change in key personnel,” said RAM.

At 12.30pm, Tenaga fell 10 sen or 0.7% to RM14.40, translating to a market capitalisation of some RM81 billion.

Meanwhile, Integrax was unchanged at RM2.72 for a market capitalisation of RM818.2 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)