Moscow: Fitch Ratings says the windfall tax on certain metals and mining and chemicals companies reportedly being considered by the Russian government will likely put pressure on profitability and reduce available cash flows
. Any rating impact will, however, depend on the level of the tax and any counteractive measures taken by the affected companies.
El-Khazindar added that the company will continue to allocate the currently available cash flows
for the reduction of debts and minimising operating risks in subsidiaries.
Thus, the available cash flows
to equity are discounted at a cost of equity of 16.3% for the period of strong growth.
The rater believes that Transnet's stand-alone credit profile "will continue to weaken over the medium term as a result of its significant rolling five-year capital investment programme." The programme will be financed with available cash flows
and additional long-term borrowings which would affect the company's credit metrics, Fitch added.
"There is a huge constraint on available cash flows
to projects like this, although we are eliminating a lot of the risks by vigorously pursuing off-take agreements to confirm the viability of the project," Julie said.
"The group directors are also continuing to work closely with its unsecured creditors and have agreed, informally, to defer or reduce payments to the unsecured creditors until there are available cash flows
within the group."
Therefore, incentive compensation mitigates the overinvestment problem by reducing the sensitivity of investment to available cash flows
. Previous studies either focused on managerial share ownership (Hadlock, 1998) or CEO pay-for-performance sensitivity from the total shareholdings (Broussard, Buchenroth, and Pilotte, 2004).
Fitch's forecasts include continued voluntary contributions to pension funds given available cash flows
that result in FFO-adjusted gross leverage at about 2.8x.
Fitch analyzed the most recently available cash flows
provided by the servicer (generally YE 2016 or YTD Sept.
from 2018 onwards, and we expect IGS to partially utilise available cash flows
to repay its debt as some of its loan covenants will tighten in 2018.