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Tuesday, November 23, 2010

Energi Mega intends to issue US$275 million US dollar bond

BI / exchange
2/11/2010
Irvin Avriano A.
Bisnis Indonesia

Energi Mega intends to issue US$275 million US dollar bond

JAKARTA: PT Energi Mega Persada Tbk, a Bakrie Group oil and gas company, plans to issue US dollar-denominated bonds worth US$275 million, or approximately IDR2.45 trillion, which is currently still in the process of preparation for the publication and ask for ratings.

The issuance will be issued through its subsidiary EMP International Holdings Pte Ltd and will be due until 2015.

This was revealed in a rating report by Moody's Investors Service and Standard & Poor's yesterday. Moody's rating agency assign B3 provisional ratings level for the business and corporate bond rating plan. The prospect of the two ratings was set at stable levels.

In the report mentioned the company plans to use the bond funds to refinance the company's debt and to fund working capital.

"Provisional rating of B3 was supported by revenue from the gas sector, Energi Mega is stable, which was also confirmed by long term contracts," says Renee Lam, Moody's Vice President & Senior Analyst in the research that been published.

She judged the expectations of the company on increasing its gas production should be sustain stabilization of cash flows for some time in the future.

The expectations, she said, also was influenced by the success of the company spawned from the income generated in the block Bentu Segat in late 2010 or early 2011 for the latest timing. She also mentioned it is still waiting for the realization of revenues from Light fields, Sirasun, and Batur in Kangean block in early 2012.

"However, Energi Mega operates on high leverage [debt to equity ratio/DER] that is very high, which also determines the factors that limit the ranking," added Lam.

PT Citi Pacific Securities analyst Henry Effendi mentioned the bond issuance plan is not cause leverage of the ENRG coded company growing because it will be used to refinance its debt.

In fact, he considered the refinancing of the PT Bakrie & Brothers Tbk subsidiary is also has the advantage to obtain an extension of repayment and get lower interest expense compared with the debt that will be paid off.

He continued, it has the potential to reduce the level of corporate leverage that is lower than the level a year ago before the rights issue earlier this year.

"Moreover, it issued bonds denominated in U.S. dollars, which is likely lower than if published in the rupiah, and now global interest rates are low."

Leverage is the ratio of liabilities compared to the equity of the company's DER. Per 2010 2nd quarter, the ratio of total liabilities to total equity stands at 0.85 times level, which decreased by 66.68% compared with same period last year. Company's leverage in the 2nd quarter of 2009 pins at 2.57 times.

When confirmed, the Energi Mega President Director Imam Agustino and Energy Mega Finance Director Didiet Ratam not reply to text messages and the cell phone didn't picked up. The same response was also shows by the Energi Mega Investor Relations Herwin Wahyu Hidayat.

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