S&P ups Advance Agro ratings

Standard & Poor's said it raised its long-term corporate credit rating on Advance Agro Public Co. Ltd. to B- from SD. At the same time, S&P raised its rating on Advance Agro's $48.7 million senior unsecured debt due 2007 (issued by Advance Agro Capital BV) to CCC from CC.

The outlook is stable.

"The upgrade is due to the improvement in Advance Agro's financial profile following the completion of its debt restructuring," said S&P credit analyst Yasmin Wirjawan. "The stable outlook reflects the company's lower near-term refinancing and liquidity risks after the restructuring exercise."

S&P said the rating on Advance Agro is constrained by its modest profitability and cash flow protection measures, which are expected to remain weak over the medium term, given intense pricing pressures, commodity price fluctuations, and high debt levels. EBITDA interest cover was below 2x during 2001 to 2003, while cash flow protection, measured by funds from operations to debt averaged about 10% during the same period.

Partly offsetting these weaknesses are the company's favorable market position and high degree of integration in its operations, which ensures its fiber and pulp supply.

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