Fitch Ratings has downgraded PT Arpeni Pratama Ocean Line Tbk's (Arpeni) foreign and local currency Issuer Default Ratings (IDR) to B- from B and its National Long-term rating to BBB-(idn) from BBB+ (idn).
The rating on the USD senior unsecured notes due 2013 has also been downgraded to CCC from B-. The Recovery Rating remains unchanged at RR5. All ratings have been placed on Rating Watch Negative (RWN).
The rating actions follow Arpeni's failure to pay the semi-annual coupon on the US$ notes which was due on 03 November 2009, as confirmed by the management. Arpeni has 30 days from the due date to pay the coupon in order to avoid a default on the notes.
Arpeni had cash reserves of around US$70m as at 30 June 2009, but the company's management has not provided specific reasons as to why the coupon payment was not made.
However, Fitch believes that Arpeni may have faced a temporary liquidity issue, which could be related to its derivatives contracts.
Fitch will resolve the RWN after management articulates the reasons behind the missed coupon payment, and demonstrates its ability to maintain future payments on time. The ratings may be downgraded further if Fitch finds that Arpeni's liquidity position has weakened significantly. The payment of the missed coupon within the grace period alone is not a sufficient condition to remove the RWN.
Fitch will resolve the RWN after management articulates the reasons behind the missed coupon payment, and demonstrates its ability to maintain future payments on time. The ratings may be downgraded further if Fitch finds that Arpeni's liquidity position has weakened significantly. The payment of the missed coupon within the grace period alone is not a sufficient condition to remove the RWN.
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