Pefindo puts Sempati papers on rating alert

JAKARTA (JP): PT Sempati Air's Rp 50 billion (US$21.2 million) commercial paper has been put on a rating alert by Pefindo, the country's only rating agency.

Pefindo stated yesterday this decision was taken because of the airline's deteriorating financial performance, particularly regarding its liquidity and leverage.

Sempati's commercial paper has an A-4 rating, meaning the country's largest private airline has adequate capacity to repay its loans but this may be susceptible to adverse economic conditions or changing circumstances.

In July 1996, Sempati's current ratio fell because of its increasing short-term debt, mostly comprising bank loans and commercial papers.

"Even with the additional equity injection, the company's leverage level as reflected by its debt-to-equity ratio still worsened," the rating agency said.

The airline has had trouble meeting its financial obligations using funds from operations, the agency said.

To improve its management of account receivables, the airline is implementing several measures to improve its financial administration, particularly its revenue accounting practices, Pefindo said.

"Although expected to bring positive impacts to the company, the restructuring program will take a long period of time," Pefindo said, adding that the company's financial woes were helping delay Sempati's initial public offering (IPO), originally scheduled for last month.

The agency said the IPO's delay would seemingly aggravate the company's worsening financial condition: "In due course, as Sempati needs to maintain a "safe" level of leverage, in addition to the need to strengthen its operating performances, an injection of fresh capital would be essential, at least, until the restructuring program is complete."

Sempati initially planned to sell between 15 percent and 30 percent of its shares to the public in October or November this year to raise between Rp 200 billion (US$85.32 million) and Rp 300 billion.

In April, Sempati sold 40 percent of its shares to Asian Aviation Inc., a Malaysian-Indonesian joint venture, to raise capital before going public, making the joint venture the largest shareholder in Sempati.

The other shareholders are Mohammad (Bob) Hasan with a 25 percent stake; Tri Usaha Bhakti, a business group affiliated with the Armed Forces, with a 20 percent stake; and Humpuss Group with a 15 percent stake.

Prior to Asian Aviation's takeover, the Humpuss Group, a diversified conglomerate controlled by President Soeharto's youngest son Hutomo Mandala Putra, owned 25 percent of the airline, Tri Usaha Bhakti owned 40 percent and Bob Hasan owned 35 percent. (hen)