Moody's rates Berau Coal bond B1

Moody's Investors Service said it assigned a provisional B1 corporate family rating to Indonesia-based PT Berau Coal and a provisional B1 rating to the proposed five-year $325 million senior secured bond to be issued by Empire Capital Resources Pte Ltd., which is 100% owned and guaranteed by Berau.

The outlook is stable.

The bond will be used to refinance shareholder loans and existing bank debt and for general corporate purposes.

The agency said the ratings reflect Berau's status as one of the world's lowest-cost producers and exporters of coal and its favorable location relative to Chinese and other Asian markets to where 60% of its production is exported, the company's well-established operations and a consistent record of production growth. The agency added that the company's financial profile is reasonably solid for the rating and it has a long concession life extending to 2025 together with two options for 10-year extensions.

The rating reflects additional factors including Berau's single dominant shareholder and limited clarity over strategic direction, corporate vision and good corporate governance, the agency said.

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