Berau Capital Resources Ltd., a unit of PT Berau Coal Energy, plans to sell as much as $100 million of five-year, 12.5 percent bonds.
The planned sale is a re-opening of the company's previous $350 million notes sale and proceeds will be used to refinance debt and for acquisition purposes. Credit Suisse Group AG and Deutsche Bank AG are managing the sale.
Moody's Investors Service has today affirmed its B2 corporate family rating for PT Berau Coal. At the same time, Moody's has affirmed the B2 senior secured bond rating for the US$350 million 5-year notes issued by Berau Capital Resources Pte Ltd,which is wholly owned by PT Berau Coal Energy.
The B2 bond rating also extends to the proposed tap issue on substantially the same terms and conditions. The outlook on both ratings is stable. The ratings have been removed from their provisional status followingcompletion of the initial bond raising exercise as well as the associated US$400 million senior secured loan transaction.
Berau Coal Energy is a 90% shareholder of Berau Coal. The bonds are guaranteed by Berau Coal Energy and its subsidiaries, which includes Berau. Funds raised at the Berau Coal Energy level will total US$850 million, including the tap issue, and will be substantially used to partially refinance bridge loans incurred for the acquisition of Berau by Recapital Advisors.
The tap issue will be used to fund the interest reserve account and payfees related to the total US$850 million debt rising exercise as well as repay a portion of the outstanding US$580 million vendor notes. The increase in the total debt burden to US$1.53 billion clearly has negative implications for financial metrics, and results in consolidated adjusted debt/EBITDA increasing to 5.15x from 5.0x, although can be contained at the B2 rating. Moody's debt is adjusted to include the vendor notes and subordinated loan from Bumi Resources at the holding company.
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