Back to reality, page-5

sorry was a cut and paste from the terminal - you need a bloomberg to read the story. I've posted the whole thing anyway.

Here's the S&P statement:

X-S&PGR Lwrs Quintis Rtgs To 'CCC+'; On CreditWatch Negative​

-- Continued delays in confirming Quintis' Indian sandalwood sales into China have, in our view, increased the risks that plantation investor inflows could be materially lower for the company.​

-- Should the sale of sandalwood into China fall through, it would in our opinion heighten the probability of an option of 400ha of plantation being put back to Quintis in July 2017, which could stress the company's liquidity.​

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

-- We will resolve the CreditWatch by the end of June 2017, when we would assess the implications on potential plantation investor inflows from the protracted negotiations regarding the sale of Quintis' Indian sandalwood into China.​

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MELBOURNE (S&P Global Ratings) May 30, 2017-- S&P Global Ratings said today that it had lowered its corporate credit rating on Australia-based sandalwood producer Quintis Ltd. to 'CCC+' from 'B'. At the same time, we placed the rating on CreditWatch with negative implications. We also lowered the ratings on the company's senior secured notes to 'CCC+' from 'B'. The recovery rating remains unchanged at '4'.​

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Continued delays in the sale of Quintis' Indian sandalwood products would, in our opinion, worsen plantation investor confidence and potentially result in materially lower investor inflows for the company. This risk, combined with the prospect of the A$37 million option on 400 hectares (ha) being put back to the company, has heightened the probability of the company's liquidity becoming stressed.​

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Should this delay in Quintis' Indian sandalwood sale continue, we believe it will be more challenging for the company to attract investor inflows over the last two weeks of June, when most of the investor cash flows occur. In addition, if the put option were exercised, it will materially stress Quintis' liquidity. Should all these events transpire, we believe the company will face significant liquidity pressure.​

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Despite sandalwood end-markets appearing attractive, the timing of Quintis' product sales to China remains uncertain. It is our understanding that the sale of Indian sandalwood products into China is progressed, and if executed, will go a long way to restoring confidence in the company's business model. In our view, supply of Indian sandalwood is limited because of a lack of reliable legal sources and long lead times to harvest of more than 15 years, with demand for the product from medicinal, cosmetic, and religious and spiritual end-markets.​

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We note that the company has announced an approach from more than one party regarding potential corporate transactions. 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, the risks in managing Indian sandalwood product sales, and the impact of the delays on plantation investor confidence in the business.​

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We will resolve the CreditWatch by the end of June 2017, once we have greater clarity regarding investor inflows and sales of sandalwood into China. By that time, there could also be more clarity on the potential for any corporate transactions.​

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