NiQuan Energy Trinidad Limited (NETL) has maintained positive credit ratings which has suggested that the level of its credit-worthiness is good and is adjudged to others in the sector in the country and across the Caribbean.
In a media release the Caribbean Information and Credit Rating Services Limited (CariCRIS) reaffirmed the company’s corporate credit ratings of CariA+ on the regional rating scale and ttA+ on the TT national scale.
The categories of ratings are CariA+ which is the regional scale foreign currency, CariA+ which is the regional scale local currency, ttA+ which is the national scale foreign currency and the ttA+ which is the national scale local currency.
CariCRIS also noted NETL’s stability based on projected completion of mechanical works by 2020 and operation of one of its plants by early next year.
It said, “Once full commercial operations successfully begin in January 2021, we expect NETL to maintain a stable credit profile over the ensuing 12 months.”
NETL is a subsidiary company of the US based NiQuan Energy LLC which specialises in clean energy, business development and operations of small and mid-scale gas-to-liquid (GTL) projects. The local office is based in Pointe-a-Pierre.
CariCRIS explained that the good rating of NETL was based on its ability to provide low construction risks, the use of technology, finances and contractual obligations.
“It is supported by a valid Fixed Price Lump Sum Turnkey (LSTK) contract with plant performance guarantees, as well as the use of a reputable and commercially-tested technology.
“The ratings are further supported by a favourable projected financial performance with adequate debt servicing capacity, together with legally binding supply and offtake agreements which are likely to be enhanced with more favourable terms and conditions.
“Favourable demand conditions as well as the Owner-Controlled Insurance Program (OCIP) which provides an additional layer of protection to the lenders also support the ratings. These rating strengths are tempered by NETL’s vulnerability to the cyclicality of global energy prices,”CarisCRIS said.
Higher than projected revenues and profits based on favourable selling prices and lower than projected operating costs, was one recommendation to increasing ratings.
However, if not paid close attention to circumstances such as an unsuccessful start-up of full commercial operations in January 2021, a fall in production below 2,400 bpd, an absence of a functioning offtake agreement with either the existing contracted offtaker or an alternate offtaker at the time of plant start up, a fall in the interest cover to below 2.5 times, a drop in the effective debt service coverage ratio to below 1.3 times or a failure to refinance its 18-months note by February 2021 will see a decrease in its ratings.
NETL shareholders are NiQuan Energy LLC which holds a 75.9 per cent share, Inshallah Investments Limited with 7.6 per cent, and other individual investors with a total share of 16.5 per cent.
The company now solely operates the World GTL Trinidad and Tobago Limited (WGTL) plant which was once a collaborative effort between Petrotrin and a private investor.
The need for WGTL was to improve the quality of the diesel and other refined products from the refinery, which carries a high sulphur content.
After filing for bankruptcy in 2009 due to significant cost overruns, delinquency and failure to meet project deadlines, Petrotrin was appointed to sell the WGTL assets, in which NETL was selected as the preferred bidder.
NETL said, “On May 19, 2016, a sale and purchase (SPA) agreement was executed which gave NETL the exclusive rights to purchase all the assets. NETL acquired the GTL4 plant at a cost of US $35 million in June 2018. The GTL plant was estimated to be approximately 85 per cent completed at the point of acquisition.”
In order to bring the WGTL plant fully on-stream next year, the company refinanced its s US $87.8 million 18-month facility and raised an additional US $32.2 million in funding.
“The additional funding brought the total amount of debt outstanding to US $120 million, with interest being capitalised during the period.
“The holders of the current debt consist of both institutional and private noteholders. This debt is expected to be subsequently refinanced by a 10-year international placement of US $150 million in secured notes in January 2021.
Covid19, it said, has hampered full start-up and full operation has been scheduled for this month.