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BASIC INDUSTRIES: Tornator (Baa3/NR/NR)): Credit Profile

BASIC INDUSTRIES
BulletCredit Bullets
  • Forestry business, with 89% or cash flows from timber sales. 41% owned by Stora Enso, having been spun off. 95% of its word is sold to Stora Enso. Prices have increased significantly following the ban on imports from Russia.
  • UOP is repayment of 2026 loan. It will look at refinancing options for the 2026 bonds next year.
  • It’s a very high margin business; Moody’s adj. EBITDA margin of 68%. That supports optically high leverage at 6.3x. Secured LTV is 43% and has been in quite a tight range historically. FCF/debt service is 5.7x. Moody’s has assets/debt at 3.6x, well above rating threshold of 2.5x.
  • On the other hand, it’s a small business, essentially single asset and highly dependent on Stora.
  • Secured debt has a 70% LTV covenant. Security may be released subject to LTSAV < 65% and can be changed. 
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  • Forestry business, with 89% or cash flows from timber sales. 41% owned by Stora Enso, having been spun off. 95% of its word is sold to Stora Enso. Prices have increased significantly following the ban on imports from Russia.
  • UOP is repayment of 2026 loan. It will look at refinancing options for the 2026 bonds next year.
  • It’s a very high margin business; Moody’s adj. EBITDA margin of 68%. That supports optically high leverage at 6.3x. Secured LTV is 43% and has been in quite a tight range historically. FCF/debt service is 5.7x. Moody’s has assets/debt at 3.6x, well above rating threshold of 2.5x.
  • On the other hand, it’s a small business, essentially single asset and highly dependent on Stora.
  • Secured debt has a 70% LTV covenant. Security may be released subject to LTSAV < 65% and can be changed.