Indika Energy proposes for US$235 million notes
January 10, 2013 Bisnis.com
PT Indika Energy Tbk will conduct issuance of more than US$235 million notes to refinance bonds.
Fitch Ratings has assigned the Indo Energy Finance II B.V senior unsecured bonds with B+.
The notes are rated at the same level as Indika's rating. However, the final rating is dependent on the receipt of final documents conforming to information already received.
As stated in Fitch statement “Most of the proceeds will be used to refinance existing debt amounted to US$235 million, mostly associated with the purchase of PT Multi Tambangjaya Utama, in 2012.”
The INDY-coded company rating is a reflection of its strong dividend inflows from PT Kideco Jaya Agung who owns 46% of Company’s share. Kideco is the third-largest coal producer in Indonesia. It also reflects increasing earnings contribution from Indika's other operations in the coal value chain such as mining contract and logistics as well as from its engineering, procurement and construction business.
Fitch also estimated the unexpected drop in coal prices will lower potential dividend from Kideco in coming years.
Nevertheless, the international ratings agency believed coal prices have stabilized and prices will improve in the next 12 to 18 months.
“Fitch may upgrade Indika's ratings if its financial performance, as measured by adjusted debt net of cash to operating EBITDA, falls below 1.5 time on a sustained basis.”