S&P: Renhe on positive watch

S&P said it placed the CCC- long-term corporate credit rating and cnCCC- long-term Greater China regional scale rating on Renhe Commercial Holdings Co. Ltd. on CreditWatch with positive implications.

The CreditWatch reflects an expectation that Renhe's leverage and liquidity position could substantially improve once the company completes its planned asset disposals and uses the proceeds to repay debt, S&P said.

The ratings continue to reflect Renhe's high liquidity deficiency, given its substantial short-term borrowings, limited cash balance and weak operating performance, the agency explained.

In May, Renhe passed a resolution to sell its underground malls to its largest shareholder for a total consideration of $1 billion, S&P said.

The company said it expects to receive the sales proceeds before the end of June. Upon the completion of the transaction, Renhe will be able to repay its outstanding offshore borrowings of about RMB 5 billion, the agency said.

Once the sale is completed and debt repaid, Renhe will have RMB 1.5 billion to RMB 2 billion of cash and no debt, S&P said.

Renhe will no longer operate in the underground mall business once the assets are disposed, the agency said, and will focus on its agricultural services business.

The company may face challenges in running this new business model as its existing management team has limited experience in agricultural services, S&P said.

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