S&P keeps Berlian Laju on watch

Standard & Poor's said its B+ long-term corporate credit rating on PT Berlian Laju Tanker Tbk. remains on CreditWatch with negative implications, as do the B+ issue ratings on the $400 million senior unsecured notes due 2014 and $125 million five-year convertible bonds due 2012 issued Berlian Laju Tanker Finance BV.

The ratings were initially placed on CreditWatch on Oct. 15 after Berlian Laju Tanker's announcement that it had agreed to acquire Chembulk Tankers LLC. The agency said the ratings remain on CreditWatch pending the finalization of Berlian Laju Tanker's long-term financing plan.

The B+ rating takes into consideration benefits derived in Berlian Laju Tanker's business profile from the entry into new market segments and an improved fleet profile, under an overall softening outlook for shipping companies, S&P said.

However, the total consideration for Chembulk will be $850 million and will be funded primarily by new debt. This funding plan increases Berlian Laju Tanker's debt-to-EBITDA ratio as of September well above 5 times and, in the agency's view, further downward pressure on the rating remains.

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