Lead Editor Investigations
asha.javeed@guardian.co.tt
Even as NiQuan is struggling to raise money to pay its bills and salaries, it was dealt with another blow after the company’s credit rating was lowered by regional rating agency Caricris yesterday.
This could further impact its ability to raise short-term funding.
Caricris warned that NiQuan’s credit rating could be further lowered if it does not successfully refinance its short-term debt by the end of this year.
In its notice, Caricris said that it lowered all NiQuan’s three ratings to B- its foreign and local currency ratings, its T&T rating and its Jamaican rating- on the regional rating scale.
“These 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 weak,” Caricris said.
Caricris said the lowering of the assigned ratings reflected NiQuan’s inability to attain full commercial operations at the nameplate capacity by September 30, 2023 (identified as a factor that could lead to a lowering of the rating in its March 2023 report) and the termination of the gas sales contract by T&T Upstream Downstream Energy Operations Company Ltd (TTUDEOCL) and which has become subject to legal proceedings by NiQuan.
It noted that NiQuan has made considerable progress in achieving a proven plant producing zero-sulphur diesel and naphtha and has transferred 15,000 barrels of product to its offtaker, Paria Fuel Trading Company.
Caricris said it will consider revising its ratings upward if NiQuan can resume a long-term gas sales contract, together with the successful refinancing of the existing Short-Term Note Instruments (STNI) into a longer-term facility.
“We may, however, further lower the ratings if the STNI is not refinanced or extended by December 31, 2023, or if any other credit-negative events occur before that date,” it warned.
The lowering is significant for NiQuan.
Following the April 2021 explosion at the plant, Caricris lowered the assigned NiQuan’s ratings by 2-notches to A- (foreign and local currency ratings) on the regional rating scale and A- on the T&T national scale.
On March 16, 2023, in its last report, Caricris noted that if Niquan was not able to achieve optimal production by June 30, 2023 it would affect its ability to refinance the existing notes or obtain approval for a further extension by noteholders by July 31, 2023.
It noted that the inability to achieve certification of full nameplate capacity of 2,400 barrels per day “adversely impacted the company’s ability to secure timely refinancing.”
At that time, it noted that at December 2022, NiQuan’s total debt stood at US $218.7 million, a 416.6 per cent increase from 2018 and that the debt was projected to further increase to US$312 million as at December 2023.
“In our view, this has reduced the company’s financial flexibility and this, alongside delayed payments to TTUDEOCL, has resulted in our lowering of the cash flow adequacy and financial flexibility rating parameter of Niquan Energy,” Caricris said.
On June 15, 2023, an incident at the plant, which is located on the compound of the mothballed refinery at Pointe-a-Pierre, eventually led to the death of 35 year-old pipe fitter Allanlane Ramkissoon.
Following the incident, the gas-to-liquids facility was subsequently closed for investigations by the Occupational Safety and Health Agency and the Ministry of Energy and Energy Industries (MEEI). This impacted NiQuan’s ability to refinance its debt which was set to take place by July 31.
In a bid to salvage the plant which went offline in August, financiers are trying to change the company’s management by removing founder and chief visionary officer Ainsley Gill from its helm.
However, Gill is the largest shareholder of the company.
