UPL Corp. Ltd.#s Proposed Senior Unsecured Notes Rated #BBB-#

Stocks and Financial Services Press Releases Monday February 26, 2018 17:59
SINGAPORE--26 Feb--S&P Global Ratings

SINGAPORE (S&P Global Ratings) Feb. 26, 2018--S&P Global Ratings today assigned its 'BBB-' long-term issue rating to UPL Corp. Ltd.'s (UPL Corp.; BBB-/Positive/-) proposed senior unsecured notes due 2028. The notes will rank pari passu with the company's existing US$500 million senior unsecured notes due 2021. UPL Corp. intends to use the notes proceeds mainly to refinance its borrowings.

We equalize our rating on the notes to the corporate credit rating on UPL Corp. That's because the majority of UPL's assets are located in India, a jurisdiction that we consider to be lacking in creditor-friendly features, and having uncertain recovery prospects in the event of bankruptcy.

The rating on UPL Corp. reflects our assessment that company is a core subsidiary of UPL Ltd. We expect UPL Corp. to remain a significant contributor to UPL's assets and cash flows. Our view of UPL's credit profile reflects the company's leading position in the post-patent crop protection business underpinned by a consistent record of industry-leading growth and profitability, and lower leverage than peers'.

The positive outlook on the corporate credit rating on UPL Corp. reflects our expectations that UPL will continue to expand its revenue base and maintain healthy margin over the next 12-24 months. This could lift UPL's operating base and cash flow profile to levels consistent with a higher rating. New product launches, efficient sourcing, and cost controls will support revenue growth and margin stability.

UPL's performance in the third quarter of 2018 was in line with our expectations. We expect the company to continue to prudently manage its regulatory affairs, working capital, growth investments, and shareholder returns. We expect UPL to maintain its debt-to-EBITDA ratio below 2.0x, and have positive discretionary cash flows and adequate liquidity over the next 12-24 months.

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