(The following was released by the rating agency)
JAKARTA/SINGAPORE, June 12 (Fitch) Fitch Ratings has upgraded PT
Aneka Gas Industri's (AGI) National Long-Term rating to
'A-(idn)' from 'BBB(idn)'. The Outlook is Stable. At the same
time, AGI's IDR80bn bond I and IDR160bn Islamic bond I, both due
in July 2013, have also been upgraded to 'A-(idn)' from
The upgrade reflects Fitch's view that AGI's capex plans
will be completed on a timely basis, with limited execution
risk. This is based on the fact the capex is progressing as
scheduled with no significant cost overruns. The upgrade also
takes into account that its leverage - as measured by net
debt/EBITDA - has remained below 3x, the threshold for a rating
upgrade to 'A-(idn)', on a sustained basis. Leverage at FYE11
was 2.5x, little changed from FYE10's 2.6x.
The Stable Outlook reflects Fitch's expectation that AGI
will maintain strong credit metrics while undertaking the
capacity expansion. Upon the completion of capex in 2013, Fitch
expects AGI's profitability to improve with efficiency gains and
higher margins at its retail business while maintaining
comfortable leverage. AGI expects to incur additional capex of
around IDR574bn between 2012 and 2013, of which 58% is to be
funded by long-term bank loans. Fitch notes that IDR330bn of
available long-term loans and planned additional IDR65bn capital
injection from majority shareholder, PT Aneka Mega Energy, in
H212 should lend comfort to AGI's liquidity position.
AGI is investing in three new air separation plants in
Gresik, Batam and Makassar and its first CO2 plant in Subang. It
expects to start commercial operation of the Gresik and Subang
plants in H212. All four new plants will boost annual production
of oxygen and nitrogen by around 60,000 and 90,000 metric cubic,
respectively, of which around 50% has already been contracted
for sale on a long-term basis.
The ratings also reflect AGI's acceptable liquidity position
with short-term debt of IDR150bn against IDR96bn of cash and
IDR26bn undrawn facilities at FYE11. Fitch expects AGI to repay
its IDR160bn and IDR80bn 2013 bonds with internal cashflows
derived from its existing and new plants.
AGI's improving scale and widespread distribution network
help support its favourable cost structure and strong pricing
power. The company commands a 90% share and a 20% share of
Indonesia's medical and industrial gases markets, respectively.
Negative rating action may result from AGI's leverage rising
to 3x on a sustained basis, or from unexpected delays to or cost
overruns of its capex plans. Conversely, positive rating action
may be taken if leverage falls below 2.5x and EBITDA margins
rise above 30% (2011: 27%) on a sustained basis.