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.”
