PT Sulfindo Adiusaha (Sulfindo), an Indonesian company which makes chlorine and chemicals. delay the bonds sale.
Standard & Poor's Ratings Services last week lowered its long-term corporate credit rating on Sulfindo to 'B-' from 'B', and placed the rating on CreditWatch with negative implications.
At the same time, Standard & Poor's also lowered its issue rating on the proposed senior secured notes to be issued by Sulfindo Netherlands B.V. to 'B-' from 'B' and placed the rating on CreditWatch with negative implications.
The downgrade reflects Standard & Poor's opinion that the postponement in Sulfindo's proposed bond issue will put significant pressure on the company's liquidity in the next six to nine months.
"In our view, the postponement of the bond issue leads to a heightened financial risk and credit profile inconsistent with the previous rating of 'B' on Sulfindo," said Standard & Poor's credit analyst Xavier Jean.
"The previous rating explicitly assumed that the company's proposed bond issue would proceed in a timely fashion and the company would use the proceeds to refinance its US$151 million bonds due 2013.
"We believe Sulfindo should be able to meet its debt and capital expenditure commitments in March and June using cash balances and internal cash flows.
Nevertheless, Sulfindo has committed capital expenditures of US$57 million and debt maturities of US$28 million between June and December 2011.
"We view these amounts as significant compared with our estimation of the company's cash flow of US$20 million-US$25 million and its discretionary cash balance of about US$25 million," Mr. Jean said.
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