Singapore, July 04, 2018 -- Moody's Investors Service has today confirmed Matahari Putra Prima Tbk
(P.T.)'s (MPPA) corporate family rating (CFR) at B3.
The rating action concludes Moody's review for downgrade initiated on
5 April 2018. The rating outlook is negative.
Moody's will withdraw the rating for its own business reasons.
RATINGS RATIONALE
"The rating confirmation at B3 reflects MPPA's improved liquidity
to support near-term operations, once it completes its IDR807
billion rights issue," says Maisam Hasnain, a Moody's
Analyst.
On 28 June 2018, MPPA obtained regulatory approval to conduct an
IDR807 billion rights issue. The company expects to complete the
rights issue before 1 August, with the proceeds used primarily to
fund working capital.
In an earlier press release issued on 5 April, MPPA stated that
its largest shareholder, the Lippo Group, will serve as a
standby buyer and underwriter for the entire rights issue.
While Moody's estimates MPPA's cash balance as of March 2018 and
proceeds from its rights issue will be insufficient to cover its IDR1.24
trillion of short-term debt, refinancing risk is mitigated,
given MPPA's track record of renewing these facilities when they
come due, despite weaker operating performance since 2017.
For example, in 1Q 2018, MPPA extended its IDR250 billion
facilities with PT Bank CIMB Niaga Tbk by one year to December 2019.
And, in January 2018, MPPA extended its IDR300 billion facility
with Bank of China (Hong Kong) Limited by one year to January 2019.
Given negative reported EBITDA generation in 2017, MPPA was unable
to meet some of its financial maintenance covenants for the year ended
December 2017. In its March 2018 financials, MPPA disclosed
it had obtained waivers from all but one bank.
MPPA has confirmed that it obtained covenant waivers from its remaining
bank in May. Absent a material upturn in operating performance,
Moody's estimates MPPA will likely require covenant waivers for the year
ended December 2018.
The rating outlook is negative, reflecting Moody's expectation that
MPPA's credit metrics will not materially improve over the next
9-12 months, as the company executes its transformation strategy
to revive operations, which includes steep price discounts and inventory
rationalization.
WITHDRAWAL OF RATING
Moody's has decided to withdraw the rating for its own business reasons.
Please refer to the Moody's Investors Service's Policy for Withdrawal
of Credit Ratings, available on its website, www.moodys.com.
The principal methodology used in this rating was Retail Industry published
in May 2018. Please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
Matahari Putra Prima Tbk (P.T.) (MPPA) is a leading retailer
in Indonesia, with multiple retail formats. At 31 December
2017, the company operated in more than 70 Indonesian cities through
113 Hypermarts, 25 Foodmarts, 15 Express stores, 102
Boston Health & Beauty and four SmartClub wholesale outlets.
PT Multipolar Tbk, a holding company that owns majority stakes in
retail, technology, media, and real estate investment
companies in Indonesia and China, owns a 50.2% stake
in MPPA.
Temasek Holdings (Private) Limited (Aaa stable), through its subsidiary,
Anderson Investment Pte. Ltd., has exchangeable rights
in MPPA. If such rights are exchanged in full, they represent
a 26.1% stake in MPPA.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Maisam Hasnain
Analyst
Corporate Finance Group
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Laura Acres
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077