Moody's may cut Gajah Tunggal

Moody's Investors Service said it placed PT Gajah Tunggal Tbk's B3 corporate family and senior secured ratings on review for possible downgrade.

This review action follows the payment of a dividend to shareholders seemingly in contravention of the covenants of its restructured bonds launched in June 2009 and the resulting alleged claim of covenant breach by an anonymous bondholder, Moody's said.

The agency noted that it understands that more than 25% of bondholders would need to agree to a declaration of covenant breach in order to enforce accelerated repayment of the bond, which matures in 2014.

"The situation is somewhat unusual in that the dividend was paid last year without the potential covenant breach being disputed by bondholders, yet the dividend declared and paid this year - about $5 million - is less than last year's payment," said Alan Greene, a Moody's vice president and senior credit officer.

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