Jan 25, 2012

BLTA cash couldn't cover short term debts

After revising PT Berlian Laju Tanker Tbk’s (BLTA) corporate rating outlook to negative in July 2011, PT Pemeringkat Efek Indonesia (Pefindo) lowered the ratings of BLTA, the company’s Bond III/2007 and Bond IV/2009 to idBBB- from idA-. 
Pefindo, in a statement published on January 17 2012, also lowered the ratings of BLTA’s Sukuk Ijarah I/2007 and Sukuk Ijarah II/2009 to idBBB-(sy) from idA-(sy).  
The downgrade was triggered by the company’s increasing refinancing risks as it has sizeable maturing debts while the overall shipping business has not yet improved, which may limit the Company’s capability to refinance the maturing debts.  
BLTA has weak liquidity position to cover its short term debts. As of September 30, 2011, the company held cash and cash equivalent as well as short term investment totaled US$195 million, which could not cover its short term debts totaling US$421.3 million (including the IDR Bonds and Sukuk totaled Rp1.09 trillion due in May and July 2012). 
The company’s cash flow protection ratios were also very weak, as shown by its EBITDA to debt of 0.1x and EBITDA to interest of 1.3x as of September 30, 2011.
The company’s corporate rating is placed on “Creditwatch with Negative Implications” to reflect our ongoing concerns over the Company’s liquidity to fulfill its maturing financial obligations.  PEFINDO will further downgrade BLTA’s corporate rating if there is no clear refinancing plan in the near term.
Berlian Tanker is a shipping company, which focuses on shipment of liquid products (chemicals, oil, gas, and edible oil) throughout Asia, including Middle East, Europe, South and North America.  The Company owns 40 chemical tankers (total capacity of 601,003 DWT/Dead Weight Ton), 11 oil tankers (748,873 DWT), 15 gas tankers (146,224 DWT), 1 FPSO tanker (60,874 DWT) and 27 chartered vessels (691,914 DWT).  As of September 30, 2011, BLTA’s major shareholder was PT Tunggaladhi Baskara with 37.95% ownership while public held around 62% share.
Disclosure: No position at the stock mentioned above.  

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