Fitch: No immediate impact on Indika's Ratings on proposed acquisition

(Jakarta/Singapore-02 December 2010)--Fitch Ratings has today said that Indonesia's PT Indika Energy Tbk's (Indika) Long-term foreign and local currency Issuer Default Ratings (IDR) of 'B+' with Stable Outlooks, as well as its 'B+ senior unsecured ratings will not be immediately affected by the company's announcement on 29 November 2010 that it plans to acquire a 51% stake in PT Mitrabahtera Segara Sejati (MBSS), an integrated coal transport and logistics services company.

Indika has yet to disclose much information on this transaction, including the potential acquisition price. However, Fitch notes that Indika's current ratings have some reasonable level of headroom to accommodate cash flow accretive investments. Indika had a cash balance (including marketable investments) of IDR3.9trn at end-September 2010. The proposed acquisition is in line with Indika's strategy of further integrating across the value chain relating to coal in Indonesia.

The transaction is subject to Indika's satisfactory due diligence and shareholder approval. Fitch will review Indika's ratings once further details and clarity on execution of the acquisition are made available.

A negative rating action may be taken if the acquisition, if it is approved, increases Indika's leverage, as measured by adjusted net debt/operating EBITDAR, to over 2x on a sustained basis. At end-September 2010, Indika's annualised adjusted net leverage was 0.6x. (ends)