Ann: Quintis Senior Secured Notes Information, page-12

Full S&P statement:

-- Quintis has an upcoming bond interest payment due on Aug. 1, 2017, and a put option on 400ha of plantation that can be exercised in July 2017.​

-- Combined with a lack of clarity regarding wood sales, lower investor cash flows, and uncertainty regarding a potential corporate restructuring, the company's liquidity stress has heightened.​

-- As a result, we are lowering the ratings on Quintis and its related debt to 'CCC-' from 'CCC+', and placing them on CreditWatch with negative implications.​

-- We will resolve the CreditWatch either on Aug. 1, 2017, when the bond interest payment is due, or prior to this date after our assessment of any completion of sandalwood sales to China or potential capital support.​

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MELBOURNE (S&P Global Ratings) June 23, 2017--S&P Global Ratings said today that it had lowered its corporate credit rating on Australia-based sandalwood producer Quintis Ltd. and issue ratings on the company's senior secured notes to 'CCC-' from 'CCC+'. The recovery rating on the notes remains unchanged at '4'. At the same time, we placed the ratings on CreditWatch with negative implications.​

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We have lowered the ratings on Quintis because the company's liquidity pressure has increased pending an upcoming interest payment due on its bonds on Aug. 1, 2017, and the potential for a put option to be exercised in July 2017. In addition, further delays in the sales of Quintis' Indian sandalwood, lower investor cash flows, and a lack of clarity regarding any potential capital support have increased the company's liquidity risk.​

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In our view, the continued uncertainty regarding wood sales and cancellation of managed investment schemes (MIS) mean that without a sale of Indian sandalwood or capital injection, the company faces acute liquidity pressure. This creates significant uncertainty around the approximately US$13 million interest payment on the outstanding senior secured bonds due at the beginning of August. In addition, the prospect of a A$37 million put option being exercised in July 2017 could accelerate any liquidity event.​

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Nevertheless, the company has announced an approach from more than one party regarding potential corporate transactions to provide capital support. We will consider the impact on the rating should any offer materialize. At this stage, our view of the rating captures Quintis' current business conditions and the impact on the company's liquidity position.​

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We will resolve the CreditWatch either by Aug. 1, 2017, when the bond interest payment is due, or prior to this date after our assessment on the completion of a potential recapitalization or sandalwood sales to China.​

The recovery rating on the notes remains unchanged at '4' - defined as "an expectation of average (i.e., 30%-50%) recovery in the event of default."