28 Jun 2004
Melbourne, June 28, 2004-Standard & Poor's Ratings Services said today it has affirmed its `BBB+/A-2' ratings on Port of Tauranga Ltd. (POTL), following a review of the company's revised capital expenditure program and financial forecasts. The revised program includes significant new investments in infrastructure to support new coal supply activity, as well as the proposed joint venture between POTL's subsidiary, Owens Cargo Co. Ltd. (Owens) and Toll Logistics New Zealand Ltd. (Toll). The outlook is positive.
"The port's proposed joint venture between Toll and Owens would strengthen POTL's business profile slightly," said Standard & Poor's credit analyst Jon Manley, associate director, Corporate & Infrastructure Finance Ratings.
"Importantly, while potential synergies through the integration of Toll's stevedoring and Owens' log marshalling services are expected, the port is not expected to have any financial exposure, ongoing financial commitments, or extend guarantees to the joint venture.
The proposed capital investment in coal infrastructure will facilitate the port's expansion in coal supply activities, which, along with an expected increase in container trade, is expected to support the company's financial performance in the medium term."
POTL owns and operates the port of Tauranga and Metroport Auckland, an inland container port located 20 kilometers south of Auckland city, on New Zealand's North Island. POTL also owns the nation's largest port operator in marshalling of bulk cargo, Owens, and 50% interest in a forestry port, North Port Ltd. Port operations contribute about 90% of POTL's earnings and cash flows, and underpin its ratings.
"If POTL continues to achieve an improving financial performance, is able to successfully consolidate the proposed joint venture, and maintains its continue stable and conservative management policies, the rating is likely to be upgraded in the next one to two years," added Mr. Manley. "However, further increases in its capital expenditure program or a forecast weakening in financial performance would result in a return to a stable outlook."
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