GFI, which owned 52% of GMA's shares, recently sold all of its shares to institutional investors via an underwritten block trade – leaving no majority shareholder controlling the company. GFI's board nominees have also resigned.
Despite the sale, Fitch Ratings said it continues to view ownership as neutral to GFMI's rating. It also expects GMA's board to remain majority independent, in line with local regulatory requirements.
“We have rated GFMI based on GMA's standalone credit profile because of Australia's strong regulatory framework and GMA's substantial minority shareholder base. GFI reduced its ownership in GMA to 66% from 100% following GMA's listing on the Australian Securities Exchange in 2014 and again to 52% in 2015,” Fitch Ratings said.
“GMA has been a reliable source of dividends for GFI and has also engaged in share buybacks and paid special dividends to return excess capital. However, this has not weakened GMA's capitalisation metrics.”
Fitch Ratings said GMA had been a reliable source of dividends for GFI. It has also engaged in share buybacks and paid special dividends to return excess capital.
“However, this has not weakened GMA's capitalisation metrics,” Fitch Ratings continued. “The Negative Outlook on GMFI's rating reflects potential pressure on GMA's financial performance and earnings as well as business profile from measures aimed at slowing the spread of the coronavirus.
“GMA's capitalisation has remained ‘Very Strong’ despite the earnings headwind, with a regulatory prescribed capital amount coverage of 1.65x at end-2020.”
