Ni­quan En­er­gy Trinidad Ltd’s for­tunes were not giv­en a help­ing hand yes­ter­day, as re­gion­al rat­ing agency Caribbean In­for­ma­tion and Cred­it Rat­ing Ser­vices (Cari­CRIS) an­nounced the low­er­ing of the com­pa­ny’s cred­it rat­ing.

In a news re­lease, Cari­CRIS said it low­ered Ni­Quan’s as­signed is­suer/cor­po­rate cred­it rat­ings by three notch­es to CariD (for­eign and lo­cal cur­ren­cy rat­ings) on the re­gion­al rat­ing scale and ttD on the Trinidad and To­ba­go (T&T) Na­tion­al Scale as well as jmD on the Ja­maica Na­tion­al Scale.

“The re­gion­al and na­tion­al scale of the T&T and Ja­maica rat­ings in­di­cate that the lev­el of cred­it­wor­thi­ness of this oblig­or, ad­judged in re­la­tion to oth­er oblig­ors in the Caribbean and with­in T&T and Ja­maica, is rat­ed de­fault,” said the re­gion­al rat­ing agency.

Cari­CRIS added, “The rat­ings re­flect Ni­Quan’s sig­nif­i­cant­ly de­te­ri­o­rat­ed busi­ness and fi­nan­cial risk pro­file due to the ab­sence of a re­li­able gas sup­ply, which has led to im­paired debt ser­vic­ing abil­i­ty.

“Ad­di­tion­al­ly, re­cur­rent op­er­a­tional chal­lenges re­sult­ing in the in­abil­i­ty of the gas-to-liq­uids plant to achieve com­mer­cialised op­er­a­tions al­so con­strain the rat­ings.

“More­over, Ni­Quan’s high and es­ca­lat­ing debt lev­els lim­it fi­nan­cial flex­i­bil­i­ty, which, along­side a weak­ened man­age­ment risk pro­file, sup­ports the de­fault rat­ing. Notwith­stand­ing this, the com­pa­ny pos­sess­es rep­utable and com­mer­cial­ly test­ed tech­nol­o­gy, al­beit no com­mer­cialised op­er­a­tions to date, and legal­ly bind­ing off­take agree­ments which re­main in place.”

In the re­lease, Cari­CRIS ex­plained that the per­ilous state of the com­pa­ny in­formed the ad­just­ed rat­ings, stat­ing, “While an event of de­fault has not been de­clared by NETL’s cred­i­tors, Cari­CRIS’ opin­ion is based on an ex­pec­ta­tion that an event of de­fault is im­mi­nent giv­en the fol­low­ing:

(1) The ter­mi­na­tion of the com­pa­ny’s gas sales con­tract by Trinidad and To­ba­go Up­stream Down­stream En­er­gy Op­er­a­tions Com­pa­ny Ltd (TTUDEO­CL) im­pairs its abil­i­ty to pro­duce out­put and se­cure sus­tain­able debt re­fi­nanc­ing;

(2) The ma­tu­ri­ty of the com­pa­ny’s short term note in­stru­ment (STNI) on Ju­ly 31, 2023, with no for­mal ex­ten­sions con­firmed to date.

The com­pa­ny’s to­tal debt in­creased to US$313.4 mil­lion as at Au­gust 2023 and fur­ther in­creased to ap­prox­i­mate­ly US$450 mil­lion as at March 2024, ac­cord­ing to the com­pa­ny’s es­ti­mate.

Cari­CRIS re­port­ed, “In March 2024, Ni­Quan in­di­cat­ed that they bor­rowed a fur­ther US $25 mil­lion via a sep­a­rate STNI fa­cil­i­ty with a ma­tu­ri­ty date of March 31, 2026. To date, Cari­CRIS has been un­able to con­firm re­ceipt of these funds.”