Kardan NV’s shares dropped the most on record and bond yields soared as Standard & Poor’s Maalot cut the company to junk and new regulations in Romania derailed plans for a shopping mall.
The shares tumbled 24 percent, the most since they were listed in 2003, to 2.812 shekels at the close in Tel Aviv. The yield on Kardan’s 1.19 billion shekels ($324 million) of 4.45 percent bonds maturing February 2016 soared 515 basis points, or 5.15 percentage points, to 27.39 percent. The TA-25 benchmark stock index was little changed.
S&P reduced its credit rating for Kardan by two levels to ilBB, two steps below investment grade, on a delay in selling assets “critical” for the company to fulfill its “significant debt repayments” in the first quarter of 2014. Separately, Kardan said a change in the Romanian law won’t permit Globe Trade Centre SA, in which it owns a 28 percent stake, to develop a land plot in Bucharest.
“The S&P rating cut and the GTC Romanian announcement are pushing the shares lower today,” Noam Pincu, a Tel Aviv-based analyst at Psagot Investment House Ltd., said today by phone. “We are hoping the company will be able to sell its asset in China to give the company the tens of million of euros it needs to pay its 2014 debt.”
Kardan has debt maturities of about 176 million euros ($228 million) to the end of 2014, S&P said today. The company had cash and liquid financial assets of about 64 million euros at the end of December, the ratings company said.
Negotiations between Kardan Land China and an unidentified international fund to sell a 50 percent stake in the mixed-use project Europark Dalian ended, the company said on March 17. Kardan Land China is resuming discussions for the sale of the project with other funds and investors, it said March 17.
“Kardan’s liquidity profile, which we had already assessed as ‘weak’ according to our criteria, has been weakened further after the breakdown in negotiations over Europark Dalian,” S&P said today.