Fitch Ratings has today said that Indonesia-based palm oil plantation company PT. Ciliandra Perkasa's (Ciliandra) BB- Long-term foreign and local currency Issuer Default Ratings (IDRs) and its National Long-term rating of A+(idn) with stable outlooks will not be affected by the refinancing of its US$ notes with secured bank debt.
On 5 May 2010 Ciliandra announced that it will repurchase the remaining USD140.8 million senior unsecured notes due 2011. The redemption, to be completed on 8 June 2010, will be largely funded by bank debt denominated in Indonesian Rupiah.
"The redemption of the USD notes reduces refinancing risks for Ciliandra, and improves the company's debt-maturity profile which can be comfortably managed within its improving operating cash generation," says Buddhika Piyasena, Director with Fitch's Corporates Ratings team.
On 5 May 2010 Ciliandra announced that it will repurchase the remaining USD140.8 million senior unsecured notes due 2011. The redemption, to be completed on 8 June 2010, will be largely funded by bank debt denominated in Indonesian Rupiah.
"The redemption of the USD notes reduces refinancing risks for Ciliandra, and improves the company's debt-maturity profile which can be comfortably managed within its improving operating cash generation," says Buddhika Piyasena, Director with Fitch's Corporates Ratings team.
While the amortisation of the new bank loan is expected to gradually increase over its term, Ciliandra's improving plantation maturity profile, which will lead to higher crude palm oil production, combined with its moderate capex needs from 2010, will improve free cash flow generation.
"We expect Ciliandra to maintain good headroom against the leverage and debt service coverage covenants attached to the new bank loans," adds Mr. Piyasena.
Following the redemption of the US$ notes, the next major debt maturity for Ciliandra is the IDR500 million bonds due in 2012. However, with Ciliandra's strong financial profile, Fitch does not view refinancing risk as a major concern. However, the agency does note that there are foreign currency risks as the majority of the company's costs and debt are now denominated in IDR while its revenues are US$-linked.
In FY09 (12 month period to end-December 2009) Ciliandra reported revenues of IDR2,054billion and EBITDA of IDR1,061 billion. Its credit metrics remain strong for its ratings, with leverage measured by adjusted debt net of cash to operating EBITDAR of 1.3x at December 2009.
Ciliandra's ratings also consider the consolidation risk with its parent, Singapores' First Resources Limited (FRL). Despite the new plantation development activity undertaken by FRL, independent of Ciliandra, Fitch expects FRL's net leverage (measured by adjusted debt net of cash to EBITDAR) to remain below 2.5x; at end-2009, FRL's net leverage was 0.8x.
Following the redemption of the US$ notes, the next major debt maturity for Ciliandra is the IDR500 million bonds due in 2012. However, with Ciliandra's strong financial profile, Fitch does not view refinancing risk as a major concern. However, the agency does note that there are foreign currency risks as the majority of the company's costs and debt are now denominated in IDR while its revenues are US$-linked.
In FY09 (12 month period to end-December 2009) Ciliandra reported revenues of IDR2,054billion and EBITDA of IDR1,061 billion. Its credit metrics remain strong for its ratings, with leverage measured by adjusted debt net of cash to operating EBITDAR of 1.3x at December 2009.
Ciliandra's ratings also consider the consolidation risk with its parent, Singapores' First Resources Limited (FRL). Despite the new plantation development activity undertaken by FRL, independent of Ciliandra, Fitch expects FRL's net leverage (measured by adjusted debt net of cash to EBITDAR) to remain below 2.5x; at end-2009, FRL's net leverage was 0.8x.
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