JAKARTA (TheInsiderStories) – Indonesian textile producer, PT Sri Rejeki Isman Tbk (IDX: SRIL), also known Sritex, announced 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.
In April, Moody’s Investor Service affirmed corporate family rating of publicly listed textile producers, Sritex rating at Ba3. The agency also maintained the Ba3 ratings on the $150 million senior unsecured notes due in 2024, issued by Golden Legacy Pte. Ltd. and unconditionally and irrevocably guaranteed by Sritex and its subsidiaries.
Its also kept the $225 million senior unsecured notes due in 2025, issued by Sritex and unconditionally and irrevocably guaranteed by all its operating subsidiaries at same level. Moody’s has also revised the outlook on these ratings to negative from stable.
“The negative outlook reflects our expectation that diminished consumer spending on apparel and footwear globally as a result of the coronavirus outbreak will reduce Sritex’s earnings and increase its working capital needs through 2020,” says Stephanie Cheong, a Moody’s Analyst on April 20.
She rated, the rapid and widening spread of the COVID-19, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. Sritex and Pan Brothers is exposed to the retail industry which has been significantly affected by the shock given its sensitivity to demand and sentiment.
“In our view, Sritex’ products like yarn and greige, which make up half of its total revenues, are particularly vulnerable as their sales not under committed contracts and could fall away quickly in case of prolonged lockdowns across the world,” adds by Cheong.
Sritex‘ garment sales should be largely stable as the company is able to pivot its garment production to other revenue channels, such as the production of masks and medical jumpsuits, which should offset expected declines in its apparel sales.
The producer’ large cash balance of $168 million at the end of 2019, along with around $102 million of availability under committed credit facilities, will be more than sufficient to cover its upcoming $116 million of debt maturities in 2020. These include $30 million and $10 million of medium term notes due in November and December 2020
In addition, $8 million of scheduled debt repayments and $68 million of short-term working capital loans which Sritex plans to rollover. The company’ Ba3 rating continues to reflect its vertically integrated operations and leading market position among Indonesian textile manufacturers. The ratings also incorporate governance risk arising from the company’s concentrated ownership structure and related party transactions.
The manufacturer based in Central Java, is a vertically integrated manufacturer of yarn, raw fabric, finished fabric and apparel, including uniforms and retail clothing. The company’ operations are spread across 25 factories, consisting of nine spinning plants, three weaving plants, five finishing plants and eight garment plants.
Sritex is majority owned by the Lukminto family (60.11 percent). Iwan Setiawan Lukminto, son of founder H.M Lukminto, has been the company’ president director since 2006. The family overseas the day-to-day control of operations. The remaining 39.89 percent share of the company is publicly traded on the Indonesian Stock Exchange.
In the third quarter of 2020, the issuer’ sales reached of $907 million, up 1.34 percent compared to the same period of last year of $895 million. From the export segment worth of $517 million and domestic $390 million. While, the net profit rose 21.88 percent to $73.79 million from last year $72.21 million.
Edited by Staff Editor, Email: email@example.com