On Nabtrade yesterday: Standard & Poor's Ratings Services said...

On Nabtrade yesterday:

Standard & Poor's Ratings Services said that it has revised its outlook to positive from stable on TFS Corp. Ltd., an Australian-based, vertically integrated, Indian sandalwood producer and plantation manager. At the same time, S&P affirmed the 'B'ratings on the company and its US $175 million senior secured notes, with a recovery rating of '3'.
"The outlook revision to positive reflects our expectation that TFS's business risk profile would strengthen in the near term.This is because we expect TFS's harvest volumes to increase meaningfully from 2017 onward, and the company will deliver increasing volumes of oil through its off take agreement for pharmaceutical-grade Indian sandalwood oil," said Standard &Poor's credit analyst Brenda Wardlaw. The company completed the harvesting of its initial trial plantations during the year ended June 30, 2014, and the second harvest is underway. Harvest volumes are currently relatively small, but will ramp up over time. A supply agreement between TFS's 50%-owned joint-venture company Santalis Pharmaceuticals Inc. and Galderma will consume a large proportion of TFS's oil production over the short term. Ms. Wardlaw added: "An upgrade could occur if TFS generates a significantly greater proportion of cash flows from product sales,while maintaining, or improving its key credit metrics. TFS's continued stability of its investment sales and management fees, supplemented with increasing income from harvested products and management of the lag between acquiring land and finalizing thesale or lease arrangement, will also support an upgrade." The outlook may be revised to stable if product sales do not increase materially as S&P expects, or if sales to domestic or global investors were to decline, reducing TFS's ability to meet its operating and financing costs. This may occur due to regulatory or other reasons.