PORT OF SPAIN, Trinidad, CMC –Trinidad Petroleum Holdings Ltd (TPHL) has expressed its “disappointment” at the “unfortunate downgrade” by the US-based agency, Standards & Poor’s (S&P).

TPHL is vested with the responsibility of managing the country’s oil and related assets. It has four subsidiaries – Heritage Petroleum Company Limited; Paria Fuel Trading Company Limited; Guaracara Refinery Limited and the state-owned oil company, Petroleum Company of Trinidad and Tobago (Petrotrin).

In its ratings released on Tuesday, the agency referenced to two major concerns that led to the downgrade to ‘B+’ from ‘BB”, citing the tight maturity profile of upcoming debt payments and the administrative default related to the delayed issuance of TPHL 2019 consolidated audited financial statements.

In a statement, TPHL said that it has been “proactively working” through both issues for “quite some time,” and that it expects them to be resolved “within short order.”

The TTPL said it has engaged its lenders and the rating agencies, outlining the challenges in preparing the 2019 consolidated financial statements on numerous occasions.

“The complications are a result of the 2018 reorganisation of the company, updated audit parameters, significantly lower materiality threshold, specialist reviews relating to the presentation of the financial statements after the reorganisation, pension obligations and asset valuations that were not represented in previous audits,’ TPHL said, adding that statements can only be completed after the 2019 Petrotrin financials are finalised.

It said that in April 2021, the company pre-emptively began internal preparations to launch a refinancing process to address significant debt maturities in June 2022.

In addition to lengthening the debt maturity profile, successful completion of the contemplated refinancing would also significantly reduce borrowing costs given the strong performance of the operating companies over the past two years, it added.

“After several months of discussions with all stakeholders to ensure a thorough, cost-effective and transparent process, we are now on the cusp of awarding a lead arranger to guide us through the execution of the refinancing exercise which we expect to complete by May 2022,” TPHL said.

Further, it said successful execution of this refinancing, which would allow the company to meet its near-term debt obligations, listed as one of the actions that may lead to an upgrade from S&P Global within the next year.

Additionally, TPHL said the fundamentals of the operating businesses, “remain extremely strong,” adding “you would note that there was no mention of concern regarding the operating performances of the underlying businesses in the S&P Global report”.

TPHL said that Heritage and Paria have published unqualified audited results for the periods ending 30 September 2019 and 2020. Collectively, Heritage and Paria have generated in excess of TT$2.6 billion in net profit and TT$5.5 billion in cash from operations for these periods.

Heritage and Paria audited results for the period ended September 30, 2021, are expected to be published in the coming weeks.

“TPHL’s balance sheet is robust and the cash balance as of January 31, 2021 stands in excess of $2 billion, even as the company continues to make all interest and principal payments in full and on time,” the company said, adding that despite the disappointment, it would “take confidence in the continued excellent performance” of the underlying business.