Paiton's $180m debt on watch: S&P

Paiton's $180m debt on watch: S&P

PT Paiton Energy, Indonesian unit of Edison Mission Energy, had
$180 million of debt placed on credit-watch with negative
implications by Standard & Poor's, which said the company's
expansion plan may hurt its creditworthiness.

The bond, issued by Paiton Energy Funding BV, is currently
rated B-, six levels below investment grade and on a level under
Indonesia's B sovereign rating, S&P said in a statement. The
outlook on the rating is stable.

Paiton last week said it plans to spend $580 million to
expand the capacity of a coal-fired power plant in East Java
province. It plans to raise the capacity of its 1,230-megawatt
Paiton I plant by 800 megawatts, and sell the power to PT
Perusahaan Listrik Negara, the state utility company.

"If Paiton proceeds with the expansion, its credit profile
could weaken, as the company might be exposed to construction
risk and a higher debt burden depending on the contractual
structure," S&P said in the statement. "The proposed sharing of
coal and ash-handling facilities of the two projects could affect
the operational factors for the existing project."

The credit-watch indicates Paiton's "rating may be affirmed
or lowered," S&P said. -- Bloomberg