Fitch gives BB- to Lippo Karawaci notes

Fitch Ratings said it assigned PT Lippo Karawaci Tbk.'s (BB-/stable) proposed dollar-denominated notes an expected rating of BB-(EXP). The notes are due in 2023 and will be issued by Theta Capital Pte. Ltd. and guaranteed by Lippo and its major subsidiaries.

The agency also affirmed the BB- ratings on Lippo's guaranteed outstanding senior unsecured notes issued by Theta Capital.

The new 2023 notes will include the exchange of its existing $250 million 7% notes maturing in 2019. Lippo is also seeking the consent of the 2019 note holders who do not participate in the exchange for the removal of all restrictive covenants on the residual 2019 notes, and the consent of the 2020 and 2022 noteholders to amend certain covenants to bring them in line with the covenants of the proposed 2023 notes.

Fitch believes that the exchange and removal of restrictive covenants of the 2019 notes will not materially impact surviving 2019 bondholders. The outstanding $403 million 2020 notes and $150 million 2022 notes, as well as the proposed 2023 notes, will include all of the restrictive covenants that Lippo is seeking consent to remove in the 2019 notes, so the surviving 2019 bondholders will continue to indirectly benefit in the form of the cross acceleration clause in the 2019 notes.

All series of notes are issued by Theta Capital and guaranteed by Lippo.

Fitch said it expects Lippo's debt to increase in 2016 as a result of the company's aggressive medium-term expansion of its hospital portfolio. The new notes will, however, extend the maturity profile of the company's debt, allowing it more flexibility to manage its cash flows.

© 2015 Prospect News.
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