PEFINDO has lowered the rating of PT Ricobana Abadi (RICO) and its Medium-Term Notes I Year 2017 to idBB- from idBB+

(July 19, 2022)--The rating action reflects the Company’s weakened business profile as its mining activities in PT Gunung Bara Utama (GBU) has been ceased since May 2022, weakening its revenue by around 30% which will worsen its capital structure and cash flow protection measures if the Company is unable to obtain new contracts. We have also revised the outlook for RICO’s corporate rating to “CreditWatch with Negative Implication” from previously “Negative”, reflecting RICO’s heightened refinancing risk to repay its maturing MTN I Year 2017 of IDR400 billion on December 20, 2022 from its internal cash flow and/or external financing, given its limited financial flexibility, and we are of the view that RICO will heavily rely on the approval from the investors to restructure the maturing MTN.

The corporate rating reflects the Company’s high customer concentration risk, aggressive capital structure and weak 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 approaching the MTN due date RICO is unable to demonstrate a significant progress in resolving the maturing MTN. PEFINDO may revise the outlook to stable if the Company is able to promptly address the refinancing risk of its maturing MTN.

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 March 31, 2022, it owned by PT Ricobana (100.00%) and Mr. Wijaya Mulia (0.00%). (ends)