Rating on Daya Guna's $225m notes downgraded

Rating on Daya Guna's $225m notes downgraded

JAKARTA (AFP): Moody's Investors' Service on Friday downgraded US$225 million of guaranteed notes issued by Indonesian fishing giant PT Daya Guna Samudra (DGS), citing crippling disruptions to its operations from the religious conflict in the Maluku islands.

Moody's said the downgrade of the notes due this year from Caa1 to Ca, was accompanied by the withdrawal of its rating.

"The rating agency believes that it will be able to obtain sufficient information from the issuer to properly and timely monitor the rating in the future," Moody's said in a statement received here.

The downgrade, it said, reflected "the prolonged damage to DGS' operations caused by the ongoing ethnic and religious conflict close to its main fishing base in Eastern Indonesia," Moody's said in a statement received here.

"Further, DGS has stated that it is unable to generate sufficient cash flow to fund its current level of operations and its debt repayment obligations."

The agency said it was uncertain whether the company's efforts to raise cash by selling off fishing boats would result in its being able to meet the December coupon payment of the guaranteed notes.

"The downgrade also reflects the apparent uncertainty in resolving creditors' claims under Indonesian law should DGS default," it added.

DGS, it said, had at the latest report in June 2000, been able to operate only 30 percent of its fleet, mainly because of the lack of experienced crews willing to operate in the area, where Christian-Muslim violence has raged for almost two years.

DGS, now delisted from the Jakarta Stock Exchange, was also in preliminary discussions with the Indonesian Bank Restructuring Agency over default on a short-term bank loan "which resulted in significant bad debt provisions, accounting for over 40 percent of its 1999 sales, Moody's said.