Bangkok--18 May--Moody's
Approximately $300 Million of Debt Securities Affected.
Moody's Investors Service has today placed under review for possible downgrade its Ba3 corporate family rating on PT Bumi Resources Tbk ("Bumi") and on the senior secured bond issued by Bumi Capital Pte Ltd, which is wholly owned and guaranteed by Bumi.
"The action has been prompted by an erosion in Bumi's financial metrics as well as heightened liquidity and refinancing risk at the holding company level," says Laura Acres, a Moody's Vice President and Senior Credit Officer.
"2009 leverage was materially higher than expected, as such downward rating triggers were breached and headroom under covenants eroded", says Acres, adding "While we expect metrics to improve over the course of 2010, they still remain weaker than Moody's had anticipated."
"Bumi's principal cash flow is composed of distributions from its majority-owned subsidiaries, KPC and Arutmin, two of Indonesia's leading coal producers."
"But these distributions are insufficient to cover the amount of debt which could fall due over the next 12 months -- in particular the US$578 million of holdco debt due in Q4 2010, including a US$150 million term loan as well as put options on two of Bumi's convertible bonds, totaling US$428 million (including premiums)", according to Acres.
While Bumi holds treasury stock currently valued at $128 million which it plans to monetize in the event a put is exercised, there remains a high degree of uncertainty as to the realizable value on its sale.
In its review, Moody's will focus on debt reduction and refinancing initiatives at the holding company level. It will also assess Bumi's ability to meet its consolidated projections and develop a sustainable
cushion under its financial covenants.
The principal methodology used in rating Bumi was Moody's Global Mining Industry published in May 2009, and available on www.moodys.com in the in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the
process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.
The last rating action was taken on 16th November, 2009 when the provisional status on Bumi's Ba3 senior secured bond rating was removed, following the closing of the bond issue.
Established in 1973 and listed on the Jakarta Stock Exchange in 1990, umi is Indonesia's largest thermal coal producer and one of the top three largest thermal coal exporters globally. Through its principal assets (65% stake in PT Kaltim Prima Coal and 70% stake in PT Arutmin), Bumi accounts for approximately 25%of Indonesia's total coal production.
Approximately 18.2% of Bumi's shares are held by Bakrie & Brothers, which is controlled by members of the Bakrie family. Members of the Bakrie family (outside of Bakrie & Brothers) also own shares in Bumi.
Hong Kong
Laura Acres
VP - Senior Credit Officer
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 3551-3077
Singapore
Philipp L. Lotter
Senior Vice President
Corporate Finance Group
Moody's Singapore Pte Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (65) 6398-8308