JAKARTA (TheInsiderStories) – Indonesia miner, PT Adaro Energy Tbk (IDX: ADRO) to distribute interim dividends with total amount of US$150 million or $0.004 a share, the company said last week. The dividends will distribute on Jan. 15, 2020.
This interim dividend is part of net profit on third quarter (3Q) of 2019. In that period, the company net profit rose 29.8 percent from $313 million to $406 million. While the revenues fell from $2.66 billion on 3Q of 2018 to $2.65 billion on 3Q of 2019.
During the quarter Adaro‘ coal production lift up from 39 million tons of coal in the 3Q of 2018 to 44.1 million tons of coal in the 3Q of 2019. While the sales volume increased to 44.7 million tons of coal from last year 39.3 million tons of coal.
Recently, the company through its unit, PT Adaro Indonesia (AI) issued a global bond worth of $750 million. The bonds that will be listed on the Singapore Stock Exchange is offered with interest rate at 4.25 percent and have maturity in 2024.
Moody’s Investors Service has assigned a Ba1 corporate family rating its unit to AI. In addition, Moody’s has assigned a Ba1 rating to the proposed US Dollar senior notes to be issued by the company, which will be guaranteed by its parent.
The miner will use the net proceeds to repay existing debt, fund capital spending, and for general corporate purposes. AI’ Ba1 rating reflects the credit quality of its parent, given the strong operational links between the two companies.
These include Adaro Energy holding the largest stake in AI at 88.5 percent, AI benefiting from its parent’ vertically integrated operations across the coal supply chain, and Adaro Energy guaranteeing all of its unit’ debt.
The company‘ thermal coal business has a long track record of stable operations with annual production of around 50 million tons of coal since 2013, making it the second largest coal producer by volume in Indonesia. Over the last 10 years, its long-term average adjusted leverage — as measured by EBITDA — has been low, hovering around 2.0x.
Moody’s expects Adaro Energy to maintain similar leverage levels over the next 2 – 3 years. The coal miner also has a record of pre-funding or prepaying its debt well ahead of maturity. For an example, in 2014, AI refinanced its $800 million notes issued in 2009 with a syndicated loan, five years ahead of scheduled maturity.
The company own by Thohir family has taken steps to diversify its earnings, as reflected in its investments in two Indonesian power projects, which are scheduled to start by the end of 2019 and 2020 respectively. In addition, the company purchased an effective 35 percent stake in Kestrel Coal Mine, an Australian metallurgical coal producer, in 2018.
Moody’s expects Adaro Energy will maintain strong liquidity over the next 12 – 18 months with sufficient cash to meet its needs until Dec. 31, 2020. The proposed notes will further strengthen its liquidity and help address its cash needs through 2021, including scheduled debt maturities and capital spending.
The stable outlook reflects Moody’s expectation that Adaro Energy will effectively execute its growth strategy while continuing to adhere to conservative financial policies. Upward rating pressure over the next 12-18 months is unlikely, given the miner’ lower scale and limited product diversification compared with similarly rated mining peers.
Adaro Indonesia is one of the largest single-site coal producers in the southern hemisphere, and one of the world’s largest sub-bituminous coal companies. AI is 88.5 percent owned by its parent, an integrated energy group listed on the Indonesia Stock Exchange with a market capitalization of around Rp41.6 trillion ($2.9 billion) as of Oct. 14, 2019.
Currently, the miner hold 88.5 percent at Adaro Indonesia. The company‘ has thermal coal business with an annual production of around 50 million tons (MT) of coal, since 2013, making it the second largest coal producer by volume in Indonesia.
As reported, the company owned by PT Saratoga Investama Sedaya Tbk (IDX: SRTG), prepared capital expenditure up to $600 million for this year. This year, Adaro Energy targetted its coal production around 56 MT of coal and income before interest, tax, depreciation and amortization $1.2 billion.
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