Moody's may downgrade Kaltim Prima Coal

Moody's Investors Service said it placed the following ratings of Kaltim Prima Coal on review for possible downgrade: Ba2 local currency corporate family rating, Ba3 local currency issuer rating and Ba2 foreign currency secured debt rating

This rating action follows, the agency said, the announcement that all of the company's existing and future receivables will be securitized to service USD$600 million of new debt to be raised by Bumi Resources, its majority owner, thus possibly significantly reducing financial flexibility at the KPC level.

Moody's said it understands that the potential new parent-level bonds will be backed by existing and future receivables generated by KPC and PT Arutmin Indonesia, both of which are subsidiaries of Bumi Resources.

Part of the new debt will be used to refinance the existing secured bank debt at the KPC level. When this occurs, Moody's said it expects to withdraw its secured bank debt rating.

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