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.