Oct 27, 2010

Medco Energi placed on credit watch

Local rating agency PT Pemeringkat Efek Indonesia (Pefindo) assigned the rating of oil and gas producer PT Medco Energi Internasional Tbk (MEDC) on credit watch with developing implications following the proposed acquisition of Encore Energy Pte Ltd, the ultimate shareholder of MEDC, by PT Pertamina, the largest oil and gas producer in Indonesia.
Currently, the ratings of MEDC, its bond II/2009 of Rp1.5 trillion, MTN I-II/2009-2010 of US$100 million and proposed MTN III/2010 of USD50 million are idAA-.
If the acquisition plan is materialized and Pertamina becomes the new shareholder, it could create a good business synergy and subsequently strengthen MEDC’s business profile. 
However, the change of shareholder structure may have implications on certain loans but the company believes that remedial steps can be taken.
Pefindo will closely monitor the realization of the acquisition and the impact to the MEDC’s overall business and financial performances.
MEDC is the largest privately-owned independent oil and gas company in Indonesia. MEDC is also engaged in downstream business (ethanol, LPG, distribution of high speed diesel) and power generation. MEDC is a public company listed in Indonesia Stock Exchange (IDX).

Disclosure: No position at the stock mentioned above.

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