PT Energi Mega Persada Tbk proposed to issues US$275 million guaranteed senior secured notes to be issued by EMP International Holdings Pte. Ltd. EMP and some of its operating subsidiaries guarantee the notes, which mature in 2015.
The company plans to use the fund for refinancing debt and working capital. Energi Mega Persada has substantial capital investment plans over the next five years, over 90% of which is for the development blocks given the company's focus on increasing production.
The company expects to partially fund these investments internally; therefore, the potential for improvement in Energi Mega Persada's financial risk profile is dependent on the successful commercialization of its existing development blocks--the Bentu PSC and Kangean PSC.
Standard & Poor's Ratings Services today assigned its 'B-' long-term corporate credit rating to Energi Mega Persada with outlook stable. Standard & Poor's also assigned its 'B-' issue rating to the proposed bonds.
The rating on Energi Mega Persada reflects the company's highly leveraged financial risk profile, exposure to hydrocarbon price movements resulting from a cyclical industry and the company's limited integration, large investment requirements, and execution risk with its major projects. These weaknesses are offset to an extent by the company's good growth potential in its development blocks and the favorable outlook for energy demand in Indonesia, particularly for gas.
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