Nile Rating, a member of international rating agency Fitch Ratings, has assigned a National Senior Unsecured debt rating of 'B (egy)' Rating Outlook Negative to Orascom Hotel Holdings' 100 million Egyptian Pounds ($17.35 million) seven-year, 13 percent semi-annual bond issue.
Nile Rating has also assigned a National Senior Unsecured debt rating of 'B (egy)' Rating Outlook Negative to Orascom Hotel Holdings (OHH). The ratings reflect the company's weak financial performance, especially the deterioration in coverage ratios, although the whole tourism sector is experiencing an unfavorable operating environment.
The ratings also take account of the company's shareholding structure with the Sawiris family, one of Egypt's most prominent business groups, owning approximately 70 percent directly or indirectly through Orascom Projects & Touristic Development. The Negative Outlook attached to both ratings assumes a continuation in the prevailing conditions in the local economy along with political instability in the region.
Although cash flow from operations declined substantially in Financial Year 2001 to EP3.2 million from EP24.1 million, OHH's better working capital management succeeded in achieving a working capital inflow of EP19.4 million in FY01. This compares with an outflow of EP30.9 million in FY00.
Additionally, capex decreased sharply in 2001 to EP17.6 million, compared to EP101.8 million for FY00. Collectively, these factors aided the business in generating a positive, although minimal, net free cash flow in FY01. OHH is likely to focus on improving its financial flexibility by seeking to restructure existing debts and to maintain adequate liquid balances while supporting its ongoing investment program. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
