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December 11, 2007 |
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CILIANDRA PERKASA: Moody's Changes Ratings Outlook to Positive Moody's Investors Service has changed to positive from stable the outlook for PT Ciliandra Perkasa's B2 corporate family rating and secured rating on its US$160 million notes. This rating action follows First Resources Limited's announcement of an IPO to raise approximately SGD192.5 million of this sum, approximately SGD110 million will be used to fund Ciliandra's new plantings, constructing crushing mills and for working capital and general corporate purposes. Ciliandra will remain as the flagship company of First Resources. "The IPO of the parent company will improve the disclosure and transparency of the group, while the additional funding to be provided to Ciliandra will enhance its liquidity profile and financial flexibility as it pursues its growth strategy through the industry cycle," says Wonnie Chu, Moody's lead analyst for Ciliandra. "Furthermore, Ciliandra is benefiting from the strong crude palm oil price and from its young plantation maturity profile with an average age of 7.8 years. Its year-to-date operating performance is also ahead of expectations," say Chu. Any rating upgrade will depend upon the company successfully executing its expansion plan and improving its home-grown production yield while maintaining its financial discipline. The key credit metrics that Moody's would consider for an upgrade include Debt/EBITDA lower than 3.0-3.5x and EBITDA/Interest greater than 3.5-4.5x on a sustained basis. On the other hand, the rating outlook will revert to stable if evidence emerges of: -- cash leakages from Ciliandra to its parent, such as through aggressive cash dividends; -- further aggressive debt-funded acquisitions/investments; and/or -- prices of crude palm oil falling beyond Moody's expectations, such that Ciliandra's credit metrics deteriorate with Debt/EBITDA increasing to 4.0-4.5x and EBITDA/Interest declining to 2.5-3.0x. Established and incorporated in Indonesia in 1992, PT Ciliandra Perkasa is an oil palm upstream operator based in Riau, Sumatera. The company owns 13 oil palm plantations totaling over 80,000 and 100,000 of planted hectares and unplanted hectares respectively as at the end of 2007. The company also has 6 palm oil crushing mills built between 1998 and 2006 with a total annual capacity of 2.1 million tonnes of fresh fruit bunches. |
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