Global AT Electronics Ltd. Rating Lowered To #D# On Missed Interest Payment

Stocks and Financial Services Press Releases Tuesday August 8, 2017 17:23
SINGAPORE--8 Aug--S&P Global Ratings

SINGAPORE (S&P Global Ratings) Aug. 8, 2017--S&P Global Ratings lowered its long-term corporate credit rating on Global A&T Electronics Ltd. (GATE) to 'D'   from 'CCC-'. At the same time, we lowered our long-term ASEAN regional scale rating on the company to 'D' from 'axCCC-'. We also lowered our long-term   issue rating on GATE's senior secured notes to 'D' from 'CCC-'.   Singapore-based GATE is an outsourced semiconductor assembly and test services   (OSAT) company.

We lowered the ratings because GATE has not made a US$56 million interest   payment due Aug. 1, 2017, on its senior secured notes maturing in 2019.

The company has a 30-day grace period to make the payment. However, we view a payment as unlikely because the interest payment would consume substantially all of the company's cash. GATE ended the second quarter of 2017 with US$69 million in cash, and stated that it can choose to make the payment at any time during the grace period as it evaluates various options. However, we believe the company will opt to use the cash to continue operations.

GATE has proposed a consensual restructuring of the notes. However, we would view such a transaction as a distressed exchange and default under our definitions because it would imply a haircut to the face value. GATE also said that, if a consensual agreement cannot be reached, the company could file for Chapter 11 protection so that it can seek debtor-in-possession financing to fund legal and business expenses.

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