Rating for Bakrie Plantations possible to downgrade

Moody's Investors Service has put on review for possible downgrade the B3 corporate family and secured bond rating of Bakrie Sumatera Plantations Tbk.

"This rating action is driven by a range of concerns about Bakrie Plantations that have accumulated during recent months," says Alan Greene, a Moody's Vice President and Senior Credit Officer, today.

"The company has seen a steady increase in leverage as reported in its 2Q 2010 financial statements despite a large rights issue of US$520 million completed earlier this year, some major accounting discrepancies were discovered in Q1 2010, and performance by the CPO business has been generally lackluster due to unusual weather patterns."

In addition, Moody's see uncertainty about the completion of the long-running acquisition of the Domba Mas oleo-chemical plants, with the timing of completion and structure of debt at that level still under negotiation.

Moody's rating review will focus on (1) the progress of the Domba Mas acquisition; (2) the resulting terms and conditions of the debt at the acquired oleo chemical plants and potential for subordination of Bakrie Plantation's bondholders; (3) Bakrie Plantation's plans for the start-up of downstream operations and the associated supply and offtake arrangements; and (4) the refinancing plans for the US$160 million maturing bonds in November 2011.

Moody's expects to complete the review no later than the end of October 2010. The last rating action with respect to Bakrie Plantation's was taken on April 16, 2009, when its corporate family and secured bond ratings were downgraded to B3 from B2 with a negative outlook. Bakrie Plantation's ratings have been assigned by evaluating factors Moody's believesare relevant to the company's credit profile, including its i) businessrisk and competitive position compared with other companies within theindustry; ii) capital structure and financial risk; iii) projectedperformance over the near to intermediate term; and iv) management'strack record and tolerance for risk.

Bakrie Plantations, is an Indonesian upstream plantation company operating mainly in Sumatra, Indonesia, with rubber plantations of some 19,000 hektare and oil palm plantations of 110,000 hektare.

It was 42% owned by the conglomerate PT Bakrie & Brothers Group (BNBR) (as of 30 June, 2010) and is consolidated into BNBR's financial statements. Bakrie Plantations was listed on both the Jakarta and Surabaya Stock Exchanges in 1990.