MINT rallies on bondholder deal, recovery plans

Shares of leading hotel operator Minor International (MINT) rose 3.42 per cent to 30.25 baht per share Wednesday morning at 11.05 am, with a trading value of 900.36 million baht, after the company said its creditors had accepted to extend a relaxation of debt agreements given the current circumstances.

The company announced that it had secured approval from its bond holders to extend the testing waiver of its financial covenant until the end of 2022. It also obtained approval to exclude the impact of the Covid-19 pandemic on its debt covenant calculations until the end of 2024. 

Minor’s directors say that this is part of the company’s plan to minimize any potential risks amid the current uncertainty before the proliferation of vaccines.

This development “will provide the company with a stable financial platform to execute our on-going balance sheet management plans and to ensure business continuity and sustainability,” chief financial officer Brian James Delaney said.

In January, MINT had around 25 billion baht of liquidity available and 29 billion baht of unutilized credit facilities, which the company assured “is sufficient to support the operations going forward.”

An analyst at KTB Securities recommended ‘Buy’ on MINT at the target price of 36 baht, saying that the covenant waiver will ease financial tension caused by the Covid-19 pandemic impact, with the debt to equity ratio (D/E) at 1.75x. 

KGI Securities forecast MINT to report a fourth-quarter normalized loss of 5.2 billion baht. “Although its restaurant business has continued on the path to recovery, the key drag should be poor hotel operations in Europe,” said the analyst. 

Financial covenants require a debtor company to adhere to certain parameters, usually regarding levels of expenses or ratios of debts to assets. A breach may lead to debt being recalled or its interest changed.

Covenants can be waived by the creditor, for example if a breach is due to exceptional circumstances and imposing the covenant would further destabilize the borrower. A waiver can take the form of allowing the company to go over or under agreed limits, or foregoing the testing for a period.

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