Moody's announces completion of a periodic review of ratings of Golden Energy And Resources Ltd
Tuesday, April 30 2019 - 06:20 AM WIB
(Singapore, April 30, 2019) -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Golden Energy And Resources Ltd and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion.
This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Key rating considerations are summarized below.
Golden Energy and Resources Ltd's (GEAR) B1 rating reflects (1) its 67% effective ownership in PT Golden Energy Mines Tbk (GEMS), an Indonesian thermal coal producer with growing production volumes, a long reserve life and healthy margins supported by integrated operations; (2) GEMS' track record of prudent capital management and performance through the coal price cycle; and (3) GEAR's robust credit metrics on a consolidated basis.
However, GEAR's rating is constrained by (1) its dependence on cash dividends from GEMS to service its debt; (2) execution risks related to its significant capacity expansion at GEMS; (3) risks related to the evolving acquisition strategy at GEAR; and (4) exposure to the cyclical thermal coal sector, with reliance on one mine for majority of its cash flows. (ends)