PEFINDO affirms ratings of Ricobana, notes

(January 5, 2023)--PEFINDO has affirmed its idCCC ratings to PT Ricobana Abadi (RICO) and its Medium-Term Notes (MTN) I Year 2017. The outlook for the corporate rating is maintained at “CreditWatch with negative implication”. Following the Company’s inability to address its maturing MTN amounting of IDR400 billion due on December 20, 2022, RICO is currently in discussion with the MTN holder to restructure the MTN. The Company already had approval to lengthen its remedial period up to 90 days from previously ten working days after the MTN’s maturity date on December 20, 2022, to finalize the restructuring process.

The corporate rating reflects the Company’s high customer concentration risk, aggressive capital structure and vulnerable cash flow protection measures with limited financial flexibility, and exposure to fluctuation of coal price. Those concerns are partially offset by its established presence in the industry.

The rating may be lowered if the Company fails to finalize the restructuring process within remedial period of 90 days. We may revise the outlook to stable if the Company successfully resolves its MTN restructuring process.

RICO was established in February 1981 and operated as coal mining contractor since 2007 with activities including overburden removal, coal hauling, and heavy equipment rental. RICO is an indirect subsidiary of PT SMR Utama Tbk through PT Ricobana and is ultimately owned by PT Trada Alam Minera Tbk. As of September 30, 2022, the Company was owned by PT Ricobana (100.00%) and Mr. Wijaya Mulia (0.00%). (ends)