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Moody’s upgrades Indika Energy
Moody's Investors Service said it upgraded Indika Energy Tbk.’s corporate family rating to Ba3 from B2 following the completion of its acquisition of an additional 45% stake in Kideco Jaya Agung, Indonesia's third largest coal producer.
At the same time, the agency upgraded the ratings on the $500 million backed senior secured notes due 2023 issued by Indo Energy Finance II BV, the $265 million backed senior secured notes due 2022 issued by Indika Energy Capital II Pte. Ltd. and the $575 million backed senior secured notes due 2024 issued by Indika Energy Capital III Pte. Ltd. to Ba3 from B2. All notes are unconditionally and irrevocably guaranteed by Indika and rank pari passu.
The outlook is stable. The concludes the review for upgrade initiated on Sept. 25.
On Dec. 8, Indika announced that it completed the Kideco acquisition after receiving all requisite approvals, increasing its shareholding in the coal producer to 91% from 46%. It also successfully raised $575 million of new notes at 5 7/8% due November 2024 to fund the acquisition.
The total purchase consideration, including an upfront payment of $517.5 million and contingent liability of $160 million, and the coupon on the new $575 million notes, are in line with Moody's expectations, the agency said.
"The upgrade of Indika's ratings to Ba3 reflects the improvement in the company's operating profile as it now controls the steady cash flow generation at Kideco, Indonesia's third largest coal mining asset. It also incorporates the company's stronger credit metrics in 2018-19 with consolidated leverage of around 3.4x-3.6x," Moody's assistant vice president and analyst Rachel Chua said in a news release.
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