The largest textile issuer in Indonesia, PT Sri Rejeki Isman Tbk. (SRIL) has appointed Helios Capital and Assegaf Hamzah & Partners to represent the company in the debt restructuring process.
The company, known as Sritex, has been trying to extend the maturity of the dollar loan by two years through January 2024.
The loan was announced in 2019 and has a deal size of US $ 350 million.
Sritex said in a March 22 statement that it was in a "vulnerable position" after its lead arranger and mandated bookrunner decided to postpone signing the loan extension, which was scheduled for March 19, due to unprecedented events.
The delay caused Fitch Ratings to cut the company to B- from BB-, citing increased liquidity and refinancing risks.
The company had 8.52 percent revenue growth last year during the pandemic. Despite the increase, Sritex said some of its bank facilities were drastically reduced due to the financial sector's increasing concerns over the textile industry.
Previously, Sri Rejeki Isman's management responded to the downgrade of the company's debt securities by rating agencies Moody's and Fitch last week. The company is currently trying to raise its debt rating again.
Sri Rejeki Director Isman Allan M. Severino said the issuer coded as SRIL wanted to clarify several things related to the downgrading of the two debt rating agencies.
"Currently, PT Sri Rejeki Isman Tbk is still continuing the syndication extension process with the Mandated Lead and Arranger Bank (MLAB)," he explained in an information disclosure.
According to him, the unresolved extension of the US $ 350 million syndication was the main factor that caused the Rating Agency to lower the Company's rating to B3 from B1 (Moody's) and B-from BB- (Fitch).
"We hope that our clarification will be well received by the Indonesian Stock Exchange. That is our explanation," he added.
Fitch has also downgraded its outstanding and proposed Sritex bonds to 'B-' / 'RR4' from 'BB-'. At the same time, Fitch Ratings Indonesia has downgraded Sritex's National Long-Term Rating to 'BB (idn)' from 'A + (idn)'. This rating has been placed in the Rating Watch Negative (RWN).
The downgrade is based on increased liquidity risk and refinancing or refinancing risk arising from uncertainty related to the extension of Sritex syndicated loan worth US $ 350 million which will mature in January 2022. RWN reflects uncertainty in the implementation of its refinancing plan.
"The National Rating of 'BB' indicates an increased risk of default relative to other issuers or bonds in the same country or monetary union," the statement said.