Bumi Resources rating lowered to 'D'; rating on US$300 million notes lowered to 'D'

(Dec. 2, 2014)--Standard & Poor's Ratings Services today lowered its long-term corporate credit rating and ASEAN regional scale rating on PT Bumi Resources Tbk. to 'D' from 'SD'.

We also lowered our long-term issue rating to 'D' from 'CCC-' on the US$300 million senior secured notes due 2016 that the Indonesia-based coal mining company Bumi Resources guarantees. Bumi Capital Pte. Ltd., a subsidiary, issued the notes. We removed the issue rating from CreditWatch, where it was placed with negative implications on Aug. 13, 2014.

At the same time, we maintained our 'D' issue rating on the US$700 million senior secured notes due 2017 that another Bumi Resources' subsidiary, Bumi Investment Pte. Ltd., issued. Bumi Resources guarantees these notes too. The notes remain in default because interest on these notes remains unpaid after the due date.

"We lowered the corporate credit rating on Bumi Resources to 'D' because we do not expect the company will service any of its debt obligations for at least the next six months. We assess this to be a general default," said Standard & Poor's credit analyst Vishal Kulkarni.

This comes after a Singapore court approved Bumi Resources subsidiaries' request for a six-month moratorium against legal and enforcement actions by noteholders to facilitate debt restructuring efforts. This moratorium will also mean the company will not service any of its other debt obligations, including bank loans, as per the intercreditor agreement.

"Because of the moratorium, we believe Bumi Resources will not pay the interest on the US$300 million in notes within the grace period that ends on Dec. 10, 2014," Mr. Kulkarni said.

We will reassess the ratings on completion of any restructuring. The ratings would then take into account the group's business prospects and prospective capital structure after the completion of debt restructuring. (ends)