TEXT-S&P Rates China Fishery's Proposed Sr Unsecd Notes 'BB-'

(The following was released by the rating agency)

July 17, 2012--Standard & Poor's Ratings Services today

assigned its 'BB-' issue rating and 'cnBB' Greater China credit

scale rating to the proposed issue of senior unsecured notes by

CFG Investment S.A.C., a wholly owned subsidiary of China

Fishery Group Ltd. (China Fishery: BB-/Negative/--; cnBB/--).

China Fishery and some of its subsidiaries guarantee the

notes. We expect China Fishery to use the majority of the net

proceeds to finance the expansion of fishing operations in the

North Pacific, including the prepayment of a vessel operating

agreement. The issue rating is subject to our review of the

final issuance documentation.

The proposed issue does not affect the 'BB-' long-term

corporate credit rating on China Fishery although the company's

leverage will increase after the issuance. We expect China

Fishery's financial risk profile to remain "aggressive" over the

next few years. In our base case, the company's ratio of total

debt to EBITDA is likely to weaken to 3.0x-3.5x in the fiscal

year ending Sept. 28, 2012, from 2.1x in fiscal 2011. The ratio

of funds from operations to total debt is likely to decline to

close to our downgrade trigger of 25% in fiscal 2012 from 37.9%

in fiscal 2011.

However, we expect this ratio to recover in the first half

of fiscal 2013 when the company repays the term loan on a

quarterly basis. We anticipate that the ratio will improve to

more than 30% at the end of fiscal 2013. We expect the company

to maintain flat revenue and gross margins of 40%-45% in fiscal

2012. China Fishery's liquidity could improve to "adequate" from

"less than adequate", as our criteria define the terms, if the

company completes the proposed bond issuance.

We view China Fishery's cash and debt management as

aggressive, reflecting its low cash balance and concentrated

debt maturity. As of March 28, 2012, China Fishery has about

US$14.4 million in unrestricted cash and about US$94 million in

undrawn committed banking facilities.

In our view, China Fishery's liquidity could remain "less

than adequate" in the next 12 months if the proposed bond

issuance does not materialize. The negative outlook on the

rating on China Fishery reflects our view that the company's

cash and debt management is likely to remain aggressive and that

its operations will continue to have limited room to

underperform over the next 12 months in order to service its

debt repayment.

RELATED CRITERIA AND RESEARCH

-- Full Analysis: China Fishery Group Ltd., March 29, 2012

-- Methodology and Assumptions: Liquidity Descriptors For

Global Corporate Issuers, Sept. 28, 2011

-- Key Credit Factors: Criteria For Rating The Global

Branded Nondurable Consumer Products Industry, April 28, 2011

-- Criteria Methodology: Business Risk/ Financial Risk

Matrix Expanded, May 27, 2009

-- 2008 Corporate Criteria: Analytical Methodology, April

15, 2008

-- 2008 Corporate Criteria: Ratios And Adjustments, April

15, 2008

-- 2008 Corporate Criteria: Rating Each Issue, April 15,

2008

Source: http://news.yahoo.com/text-p-rates-china-fisherys-proposed-sr-unsecd-031423392--finance.html

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