'BB+' rating given to DGS $225m notes<\/p>\n
JAKARTA (JP): Standard and Poor's, an international rating
\nagency, announced yesterday a \"BB+\" rating for the US$225 million
\nnotes issued by DGS International Finance Company B.V.<\/p>\n
The $225 million notes will mature in 2007 and are 10 percent
\nguaranteed by PT Daya Guna Samudera TBk (DGS), an integrated
\nfishing company listed on the Jakarta Stock Exchange.<\/p>\n
The rating agency said the rating outlook was stable.<\/p>\n
It also said DGS's rating reflected the state of its
\nprofitable, low-cost fishery operations and favorable growth
\nprospects.<\/p>\n
It said DGS's fishery operations were supported by access to
\nabundant fish resources.<\/p>\n
It said that this mitigated the company's limited product
\nrange, geographic diversity and vulnerable position as a small
\nplayer in global commodity fish markets.<\/p>\n
Ambitious expansion and increasing reliance on debt-funding
\nwould seriously harm DGS's financial position in the 1997 fiscal
\nyear, the rating company said.<\/p>\n
But with strong profitability, operating cash flow and its
\nflexible capital expenditure program the group should maintain
\nits credit rating, it said.<\/p>\n
DGS's Benjina operation in eastern Indonesia's Arafura Sea is
\nthe group's key earner. It generated about 55 percent of the
\ngroup's gross operating profit in 1996.<\/p>\n
This was supported by Kimaan, the company's latest Arafura Sea
\noperation, which generated a further 10 percent gross profit.
\nTarempa, in the South China sea, accounted for the remaining 35
\npercent.<\/p>\n
About two-thirds of the company's capital expenditure program
\nis allocated to the Benjina and Kimaan operations, reflecting the
\nregion's abundant resources and low level of competition.<\/p>\n
The agency said that these two bases and in particular their
\nfrozen fish operations would remain DGS's key earners in the
\nmedium term.<\/p>\n
\"This will be supported by an expansion of the fish fillet and
\nsurimi operations and new fishing ventures in DGS's unexploited
\nfishing areas,\" it said.<\/p>\n
Despite its dependency on frozen fish sales, DGS should
\ncontinue to benefit from favorable market conditions in the Asian
\nregion in the medium term, particularly as yields decline in
\ntraditional fishing grounds, it said.<\/p>\n
But the industry is very fragmented and despite its size DGS
\nrepresents less than one percent of the world's fish market.<\/p>\n
The agency said that from an unrealistically strong position
\nin 1996, DGS will take a moderately aggressive line this year as
\nits debt will increase to finance the initial phase of its five-
\nyear $1 billion expansion program. (hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bb-rating-given-to-dgs-225m-notes-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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