S&P affirms Davomas

Standard & Poor's said it affirmed its B+ rating on PT Davomas Abadi Tbk. and affirmed its B+ rating on the $150 million principal amount of the 11% guaranteed senior secured notes due in 2011. The company proposes to increase this issue to a total of $238 million through $88 million of long-term senior secured bonds to be issued by Davomas International Finance Co. Ltd.

The outlook is stable.

Proceeds, along with part of the company's Rp 521 billion cash balance, will be used to finance a capital expenditure program.

The agency said Davomas' credit profile is supported by the company's established export-oriented business, strong domestic market position, favorable industry outlook and improving cash flow generation.

However, the ratings are constrained by Davomas' single-site operating risk and limited product range, customer concentration risk and the fact that its profitability and cash flow are highly dependent on cocoa prices.

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