Moody’s Investors Service Inc. said Wednesday it has placed its Ba3 issuer rating on Penta-Ocean Construction Co. under review for possible downgrade.
The move reflects Moody’s growing concern that the second-tier general contractor’s profitability and financial profile will continue to be pressured over the medium term by public spending cuts and the depressed economy, the major U.S. credit-rating agency said.
In its review, Moody’s will reassess Penta-Ocean’s ability to improve earnings in the prevailing difficult operating environment. Moody’s will also assess Penta-Ocean’s capacity to restore its capital position within a reasonable time frame under its new management plan.
Recently revising its earnings outlook for the business year through next March, Penta-Ocean, a leading global marine construction contractor, said it expects an unconsolidated net loss of 17.5 billion yen after 26 billion yen in extraordinary losses, including 16.6 billion yen in losses from related companies and an unrealized loss of 1.9 billion yen on a property to be sold, according to Moody’s.