BILT ends 3% up after S&P revises outlook to positive from stable

Shares of Ballarpur Industries Ltd (BILT) surged over 6 per cent in trade on Thursday after ratings agency Standard & Poor's revised outlook on the company and its core subsidiary Bilt Paper BV to positive from stable on the back of its exit from Malaysian unit Sabah Forest Industries.

The stock hit an intraday high of Rs 17.07, up 6.22 per cent. It ended at Rs 16.64, up 3.55 per cent.

S&P said it had affirmed 'B' long-term corporate credit ratings on BILT and its subsidiary but withdrew all the ratings at the company's request.

"The outlook revision followed BILT's announcement on Sepember 24, 2015, that it plans to sell its entire stake in its Malaysian unit Sabah Forest Industries for an enterprise valuation of $500 million," S&P said in a statement.

The positive outlook at the time of withdrawal reflected view that BILT will use the majority of the proceeds from the sale to repay its debt, leading to a material improvement in its leverage, it added.

At the time of the withdrawal, the ratings affirmation reflected BILT's continued stable operating performance and ability to manage its debt maturities.

"We expect the company to maintain an EBITDA margin of 17-18 per cent and manage its banking relationships to roll over its debt maturities," it said.

The ratings agency further said it could have revised the outlook to stable if BILT faced roadblocks in completing the asset sale; used a significant portion of the sale proceeds for shareholder distribution, such that the expected improvement in leverage seemed unlikely over the next 12 months or its liquidity or operating performance was weaker than expected.

(With inputs from PTI)