(Alliance News) - Moody's Investors Service on Friday downgraded foreign currency unit Travelex after parent Finablr PLC announced it was mulling a possible insolvency.
Finablr on Tuesday said it intends to potentially seek insolvency in a bid to maximise any remaining value in the company. This was after the company, recently downgraded from the FTSE 250 index, discovered undisclosed loans against shares worth USD100 million.
The credit ratings agency downgraded Travelex's corporate family rating to Ca from Caa1
and the company's probability of default score to Ca-PD from Caa-PD.
The ratings carry a negative outlook, unchanged.
Moody's said: "This rating action follows the announcement by Finablr, Travelex's parent, on March 17 that it was preparing to undertake contingency planning for a potential insolvency appointment following an earlier statement on March 16 of the suspension of listing, liquidity pressures, chief executive officer resignation and the establishment of the committee of independent non-executive directors as well as the appointment of Kroll to undertake an independent review.
Last week Monday, Finablr shares were suspended from trading and earlier in March, the company announced "urgent" steps to look into liquidity and cash flow.
As part of "a package of urgent measures", Finablr said last Monday that CEO Promoth Manghat will step down, but will continue to support the company while it finds a suitable successor.
Aside from Finablr's difficulty internally, Travelex has also been faced with outside pressures, specifically the Covid-19 outbreak hammering the travel sector and tumbling oil prices causing market uncertainty.
Moody's added: "The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The travel sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment."
By Eric Cunha; ericcunha@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.