JAKARTA (TheInsiderStories) – Indonesian textile manufacturer, PT Sri Rejeki Isman Tbk (IDX: SRTX) also known Sritex, offered senior unsecured notes US$150 million for debt refinancing. Moody’s Investors Service has assigned a B1 and Fitch BB- rating to the global bond issued by the company.
The notes will be issued by the issuer and guaranteed by its subsidiaries, PT Sinar Pantja Djaja, PT Bitratex Industries and PT Primayudha Mandirijaya. The notes are rated at the same level as its senior unsecured rating as they represent the company’s unconditional, unsecured and un-subordinated obligations.
Sritex will use the net bond proceeds to refinance the $150 million revolver tranche of its $350 million syndicated loan facility maturing January 2022. The remainder will be used to term out short-term working capital debt. The transaction is expected to be leverage neutral.
As of first nine month 2020, the producer had $159 million of cash and $87 million of availability under committed bank lines, against around $611 million of debt coming due over the next 18 months. In details, $174 million outstanding under short-term working capital lines, $65 million of medium-term notes (of which $40 million has been paid in Q4 2020), a $350 million syndicated loan facility maturing in January 2022, and around $22 million of debt amortization payments.
Sritex had on Nov. 2 sought lenders’ consent to extend the maturity of its $350 million syndicated loan facility by two years to January 2024. The lenders have until Feb. 2, 2021, to respond if they are willing to extend. There is no minimum acceptance amount and lenders unwilling to extend will need to be repaid by the original January 2022 maturity date.
The ratings reflects its vertically integrated operations and leading market position among Indonesian textile manufacturers. Also considers the company’ reliance on short-term funding to support meaningful working capital needs amid continued challenges in its key end-markets and incorporates governance risk arising from its concentrated ownership structure and related party transactions.
The negative outlook reflects the increasing refinancing risks associated with Sritex‘ $350 million syndicated loan maturing January 2022 amid difficult market conditions. In November of 2020, the issuer has issued Medium Term Notes (MTN) worth of US$30 million.
The MTN was purchased by state-owned asset management firm, PT Bahana TCW Investment Management. For background, the issuer has an obligation to paid the 2017′ MTN, which matured on Nov. 1, with an interest rate of 5.8 percent per year. The new debt raised an A+ rating from PT Fitch Ratings Indonesia.
Sritex still has other MTNs which will mature in this year and 2021 with total amount of Rp35 billion. Both have a coupon rate 5.8 percent. The company also obtained a short-term credit facility from PT BPD Jawa Barat and Banten Tbk (IDX: BEKS) with a total limit of Rp550 billion.
This credit facility aims to finance the company’ working capital needs and has a one year term.
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