TRUSTCO GROUP HOLDINGS LIMITED - Global Credit Rating Announcement and Update on Progress Made with Restructuring of Debt with International Funders

Release Date: 31/08/2018 16:40
Code(s): TTO
 
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Global Credit Rating Announcement and Update on Progress Made with Restructuring of Debt with International Funders

TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia
(Registration number 2003/058)
Registered as an external company in South Africa
(External registration number 2009/002634/10)
NSX share code: TUC
JSE share code: TTO
ISIN Number: NA000A0RF067
(“Trustco” or “the Company”)


Global Credit Rating Announcement and update on progress made with restructuring of debt with
international funders (“Lenders Group”)

Global Credit Ratings (“GCR”) has downgraded Trustco’s national scale long term rating of BBB+(NA)
and its short term rating of A2(NA) to LD (NA).

GCR notes the following in its rating rationale:


•     The rating action reflects an agreed upon lender standstill between Trustco and the Lenders
      Group. Trustco continued to service interest as per the original agreements with the Lenders
      Group and the standstill agreement between the parties.

•     Under GCR rating definitions a limited default (LD) occurs when an obligor has failed to meet
      scheduled payments and/or interest payments on one or more of its obligations. The request
      for the restructuring was initiated by Trustco before the payment obligations were due and prior
      to the Lenders Group agreeing to the restructuring. Fundamentally the terms of the credit
      standstill requires that no principal payments against the original agreements with the Lenders
      Group will be made until the restructuring is complete – regardless of available liquidity the
      Trustco Group has.

•     GCR confirmed that they expect the renegotiations to be successful, due to the strong funder
      buy in to the process and believes that there may be some further non-payment of principal
      during the standstill period as agreed with the Lenders Group. Post the restructuring
      or upon evidence that there will be no more non-payment of principal, the GCR would be able
      to lift the ratings to a non-default grade.

•     GCR also noted that Trustco’s credit profile benefits from good diversification, including a more
      recent expansion in natural resources. GCR stated that revenue stability is expected to benefit
      from the group’s relatively strong business diversification. The parties believe that due to the
      partial sale of one of the subsidiaries, the current liquidity situation of the entity is adequate.

Lastly, GCR confirmed that upside rating movement will likely follow the successful restructuring of
debt and repayment of principal on schedule.

Restructuring update with Lenders Group

Trustco has appointed PWC as debt restructuring specialists to assist with the process of realigning
covenants and payment terms as part of the re-financing process with the Lenders Group. The parties
would assess and reconsider some of the restrictive and obsolete financial covenants. Some of these
covenants date back as far as ten years ago. Trustco now aims to replace said covenants with a series
of updated and modernised covenants, more aligned to Trustco’s current capital structure, updated
IFRS standards and the rapid development and dynamics of Trustco’s operating segments Trustco has
also bolstered its internal finance capacity and now has a dedicated team working with PWC on a
mutually beneficial agreement between Trustco and the Lenders Group. Trustco believes the
restructuring process could be finalised as early as December 2018.


Dr Quinton van Rooyen, Group MD and CEO of Trustco, remarked, “Trustco has since inception
focused on developing and acquiring a diversified asset base capable of supporting the group
regardless of the current economic conditions, in order to provide resilience to the group’s business
models and enabling them to provide superior growth to shareholders. Restructuring our funding lines
is thus a necessity as these assets are developed to align with our diversified basket of top quality
assets and will ensure continued resilience going forward. As such, I see this rating and the
restructuring process a required step for Trustco to move forward and fully expect it to have a positive
impact on future growth.“


The rating is valid until August 2019 and the announcement is available at
https://globalratings.net/news/article/gcr-downgrades-trustco-group-holdings-limiteds-rating-to-
ldsubna-sub and on Trustco’s website at http://www.tgh.na/investors/global-credit-rating/


31 August 2018


Amanda Bruyns
Company Secretary: Trustco Group Holdings Limited


JSE Equity Sponsor
Vunani Corporate Finance


JSE Debt Sponsor
Merchantec Capital


NSX Sponsor
Simonis Storm Securities Proprietary Limited

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