Fitch puts Berlian Laju Tanker on watch

Fitch Ratings said it placed PT Berlian Laju Tanker Tbk's long-term foreign- and local-currency issuer default ratings of BB- on Rating Watch negative following news that the company plans to acquire Chembulk LLC for $850 million. Fitch also said it placed the BB- rating of the $400 million senior unsecured notes due 2014 issued by BLT Finance BV and guaranteed by BLT on Rating Watch negative.

Fitch said it estimates the company's financial leverage, as measured by the net debt-to-EBITDA ratio, will rise significantly from the 2.7x level attained in the first half of 2007.

The degree of potential downgrade, if any, will be dependent on the level of Berlian Laju Tanker's debt reduction after the transaction. If new cash infusion into the company is not significant, a downgrade by more than one notch may be warranted, given the resultant high financial leverage despite the prevailing high freight rates, the agency said.

The ratings could be affirmed if the company is able to demonstrate that current financial leverage levels can be maintained, Fitch said.

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