Global Liman Isletmeleri A.S. -- Moody's downgrades Global Liman ratings, maintains negative outlook

Rating Action: Moody's downgrades Global Liman ratings, maintains negative outlookGlobal Credit Research - 12 Apr 2021London, 12 April 2021 -- Moody's Investors Service (Moody's) has today downgraded the long-term corporate family rating (CFR) of Global Liman Isletmeleri A.S. (Global Liman) to Caa2 from Caa1 and the probability of default rating (PDR) to Ca-PD from Caa1-PD. Concurrently, Moody's downgraded to Caa3 from Caa2 the rating of the company's USD250 million guaranteed senior unsecured notes due November 2021. The issuer outlook remains negative.A full list of affected ratings is provided towards the end of this press release.RATINGS RATIONALEToday's rating action reflects the growing risks to Global Liman's capital structure. These increasing risks are evidenced, in Moody's view, by the company's new tender offer, which came after a proposed scheme of arrangement was withdrawn. The downgrade takes into account the company's weak liquidity and the significant refinancing risk associated with the USD250 million bond due November 2021, coupled with the potential for a moderate loss for the bondholders as the company seeks to address its debt maturities.On 7 April 2021, Global Liman launched a tender offer for up to USD75 million in outstanding principal of the USD250 million November 2021 notes [1]. The price will be determined according to a Dutch auction process, with the minimum price set at USD700 per USD1,000 in principal amount of the notes. The offer will expire on 13 April 2021, unless extended, with settlement expected on or around 14 April 2021. If the tender offer results in the company purchasing the notes below their par value, then Moody's will consider the transaction a distressed exchange and append the "LD" designation to the PDR following the settlement.The tender offer follows withdrawal, on 6 April 2021, of a proposed scheme of arrangement for the refinancing of the USD250 million notes. The scheme included an extension of the debt maturity which would have addressed the refinancing risk. Negotiations between the company and noteholders were, however, unsuccessful. In particular, Global Liman was unable to reach agreement with an ad hoc noteholder group, whose support was key.If the tender offer is completed as proposed, the debt reduction will be positive. However, and in Moody's view, Global Liman will still face significant near-term refinancing risk with a capital structure, which is unsustainable in the context of the current disruption to the cruise activities and uncertain recovery prospects.Overall, Global Liman's Caa2 CFR reflects the uncertainty and magnitude of the operational disruptions caused by the coronavirus pandemic and the group's weak liquidity as the group continues to burn cash whilst cruise activity is disrupted. At the same time, it recognises the potential for improvement in the group's cash flow generation once the coronavirus outbreak is contained and cruises resume.The Caa3 rating of the senior unsecured notes reflects the potential for a moderate loss for the bondholders and it further takes account of their position in Global Liman's capital structure. The notes are subordinated to the group's debt at the operating subsidiaries and thus are rated one notch below the CFR.ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONSGlobal Liman has been severely impacted by the breadth and severity of the shock associated with the rapid spread of the coronavirus outbreak. Moody's regards the coronavirus outbreak, which -- coupled with the government measures put in place to contain it and the weak global economic outlook -- continues to disrupt the cruise port industry, as a social risk under its ESG framework, given the substantial implications for public health and safety.RATIONALE FOR NEGATIVE OUTLOOKThe negative outlook reflects the possibility of a rating downgrade if Global Liman does not address its debt maturities in a timely manner, with increasing risk of a disorderly default and a potential for lower recovery for creditors.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSGiven the negative outlook, a rating upgrade is currently unlikely. However, the outlook could change to stable if Global Liman strengthens its liquidity and it appears likely that the company's earnings start to recover leading to a more sustainable capital structure.An upgrade of Global Liman's ratings is unlikely before implementation of a sustainable capital structure and resumption of cruise operations supporting positive cash flow generation.The ratings could be downgraded if Global Liman were to default on its debt obligations, or if recovery expectations on the company's debt instruments were to weaken.LIST OF AFFECTED RATINGSIssuer: Global Liman Isletmeleri A.S.Downgrades:....Probability of Default Rating, Downgraded to Ca-PD from Caa1-PD....LT Corporate Family Rating, Downgraded to Caa2 from Caa1....Backed Senior Unsecured Regular Bond/Debenture, Downgraded to Caa3 from Caa2Outlook Actions:....Outlook, Remains NegativePRINCIPAL METHODOLOGYThe principal methodology used in these ratings was Privately Managed Port Companies published in September 2016 and available at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1040210. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.Global Liman Isletmeleri A.S. is a port operator domiciled in Turkey. The company operates a number of cruise ports internationally and one commercial port. Global Liman is 100% owned by Global Ports Holding Plc, which is listed on the London Stock Exchange.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.At least one ESG consideration was material to the credit rating action(s) announced and described above.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com. REFERENCES / CITATIONS [1]https://www.londonstockexchange.com/news-article/GPH/launches-eurobond-tender-offer/14927241Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Joanna Fic Senior Vice President Infrastructure Finance Group Moody's Investors Service Ltd. One Canada Square Canary Wharf London E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Neil Griffiths-Lambeth Associate Managing Director Infrastructure Finance Group JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Releasing Office: Moody's Investors Service Ltd. 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