Jim Ratcliffe faces growing concerns over the financial health of his chemicals empire as its debt pile is forecast to reach almost €12bn this year and his sporting interests including Manchester United and New Zealand rugby hit crisis point.
Two leading credit ratings agencies raised red flags over the Ineos Group weeks before it emerged that the billionaire industrialist would make another 200 redundancies at Manchester United and allegedly cut sponsorship payments to the All Blacks rugby team, blaming “the deindustrialisation of Europe”.
Fitch Ratings and Moody’s, which provide financial health checks for most big companies, said Ratcliffe’s chemicals business had racked up debts that were between five to six times larger than the company’s annual earnings.
They added that Ineos could take longer than expected to repay those debts in part because of weakness in the European chemical industry after years of rocketing energy costs after Russia’s invasion of Ukraine dramatically cut exports of gas to across Europe.
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Specifically, Fitch said there was “uncertainty” over the plan to repay related-party loans of £800m (€958m) to other parts of the Ineos business empire, meaning the company could remain weighed down by hefty debts until 2027.
The credit agencies have both downgraded their outlooks for the company to “negative”, which could dent its ability to borrow from the leading investment banks at the same terms it was offered in the past.
It comes as the Manchester United minority owner is said to believe the job redundancies are necessary to help the club avoid going bust.
Ratcliffe is said to feel he has little choice other than to take tough measures after United lost £300m (€360m) over the past three years but is confident that acting now can lead to the club being profitable and highly competitive in two years’ time.
United insiders have said the club would have run out of cash without the $300m (€289m) Ratcliffe injected last year. The final $100m (€96m) was paid in December and raised his shareholding to 27.7 per cent. It is understood United’s cash reserves would have run dangerously low without that.
Ratcliffe is also facing a legal battle with New Zealand Rugby after he blamed Europe’s “high energy costs and extreme carbon taxes” for his company’s alleged failure to make sponsorship payments to the All Blacks team.
A spokesperson for Ineos Group said the ratings agencies’ downgrades reflect the “broader economic challenges facing the European manufacturing industry, including sluggish GDP growth and ongoing deindustrialisation pressures”.
“This is a sector-wide trend impacting all chemical companies,” they added. – Guardian
