S&P affirms Sompoerna

Standard & Poor's affirmed PT Hanjaya Mandala Sampoerna Tbk's senior unsecured notes due June 15, 2006 at BB+ and the company's BB+ long-term corporate credit rating.

The outlook remains stable.

The ratings reflect a highly regulated business environment, volatility in raw-material prices and significant business and product concentration, the agency said.

S&P said these risks are offset by the company's strong market position as Indonesia's second-largest cigarette manufacturer, its acquisition by Philip Morris International, its strategic importance to ultimate parent company Altria Group Inc., strong financial metrics and a degree of insulation from sovereign debt risks.

Based on the agency's estimates, funds from operations to debt and debt to EBITDA are expected to improve to more than 100% and less than 1x, respectively, for fiscal years 2005 to 2006. In light of its volatile operating environment, Sampoerna maintains good liquidity and low refinancing risk in its borrowings, S&P said.

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