Indorayon's notes get BB

Indorayon's notes get BB

HONG KONG (Reuter): Standard & Poor's said it had assigned a rating of BB to Indorayon International Finance B.V.'s US$150 million 10 percent Guaranteed Notes due 2001 and had revised the outlook to stable from negative.

The issuer is wholly owned by, and the notes are guaranteed by, PT Inti Indorayan Utama. The notes were issued on March 29 to European investors.

Indorayon's rating reflects low operating costs, a favorable regional growth outlook for dissolving pulp and rayon and the increasing integration of the company's operations, S&P said.

The rating is limited to the current category due to the lack of operational diversity and moderately aggressive finances. Indorayon operates one mill in Sumatra, Indonesia.

In a recently announced strategic initiative, Indorayon plans to expand into core business production of those chemicals related to the manufacture of paper pulp and rayon fiber.

Subject to shareholder approvals, Indorayon is likely to acquire the chemical operations of related company PT Riau Andalan Pulp and Paper (Riaupulp), S&P said.

Riaupulp is rated B-plus.